Tracker scandal: Too early to say if there was collusion between banks

AIB chief executive Bernard Byrne says the bank will ‘a fuller statement tomorrow’

Speaking outside the Department of Finance, Phillip Lane, Governor of the Central Bank of Ireland, said that the majority of bank customers affected by the tracker mortgage scandal, will be compensated by Christmas. Video: Fiach Kelly

 

It is too early to say whether or not there was collusion between banks in denying customers cheaper tracker mortgages, the Taoiseach Leo Varadkar has said.

Speaking in Paris, he said “it’s a little bit premature to say whether or not there was collusion. There is an investigation under way by the Central Bank and I don’t want to pre-judge the outcome of that”.

At the Oireachtas finance committee last week questions were raised with the Central Bank governor Philip Lane about how the banks appeared to have made the same mistakes and face the same problems at the same time. It suggested “a collective and uniform approach”, Fine Fáil TD Michael McGrath said.

Mr Lane said there was an issue with the culture of the banking system.

Questioned about this in Paris on Tuesday, Mr Varadkar said there was a divergence among the banks. “From listening to the report that Minister (for finance, Paschal) Donohoe gave Cabinet yesterday, different banks are taking a very different approach to this. While you could impose global sanctions on all banks, where we are at the moment now is seeing which banks are admitting that wrong was done, admitting that people were wronged,” he said.

“We are talking about up to 20,000 people and their families who were wronged. They must always be at the foremost of our minds in resolving this. We want to see over the next couple of days and over the next week or so and certainly between now and the end of the year, which banks accept that what they did was wrong and compensate people appropriately and then we can take further action after that,” he added.

Asked if he meant levies would be imposed on banks the Taoiseach said Mr Donohoe will make a statement on Wednesday after he has met with all the bank CEOs.

“This has gone on too long, and we are going to make sure it’s sorted out”.

Thousands of homeowners have been caught up in the tracker mortgage scandal which saw banks wrongly refusing customers access to loss-making tracker mortgages in the post-crash period.

Some of those who were overcharged went on to struggle to meet their repayments and some lost their homes through repossession.

The chief executives of AIB and Ulster Bank again apologised to customers caught up in the tracker mortgage controversy on Tuesday. Speaking as he left a meeting with the Minister for Finance, Bernard Byrne said AIB is confident of making “significant progress” in bringing the scandal to an end. The Minister is also meeting senior executives from Ulster Bank on Tuesday.

Ulster Bank chief executive Gerry Mallon also “unequivocally” apologised on behalf of his institution. Both chief executives said they would provide an update on how they are handling the

As of July this year AIB is dealing 3,200 cases of mortgage customers being incorrectly moved from their tracker mortgage, of which, the bank says, 3,104 have been dealt with. AIB has paid out €133 million to deal with the issues and has set aside €190 million to resolve all the cases.

Ulster Bank is dealing with 3,500 cases of which 40 have been dealt with so far. The bank has set aside €211 million to resolve its cases.

Mr Byrne said on Tuesday AIB was adhering to the framework laid down by the Central Bank. “We met with the Minister, it was a very constructive meeting,” Mr Byrne said as he left the Department of Finance.

‘I apologise again’

“We outlined to the Minister the work we have undertaken to date and the progress we have made in addressing the customers who have issues. We have apologised several times before and I apologise again in respect of what’s happened in respect of this to tracker customers.

“We listened to what the Minister had to say and we are going make a fuller statement tomorrow in respect of that and, for the moment, what we are able to confirm is that we are fully committed to working in line with the framework that exists and confident we will be able to make significant progress again.”

Mr Mallon said he had met the Minister and “listened to what he had to say. We have apologised unequivocally for the mistakes the bank have made and I’d like to reiterate that apology again today. We are genuinely very sorry. Our number one focus as a bank is putting this right.”

The Government said it will name banks that do not co-operate with its attempt to resolve the tracker-mortgage scandal by committing to compensate customers.

Mr Donohoe briefed the Cabinet on the matter on Monday night. Sources said he indicated that the Government would publicly identify any banks that hold out.

Mr Donohoe said he would make a statement on Wednesday on the scandal after he has met a number of the banks.

Until now the Government has largely dealt with the banks as a whole, but Mr Donohoe indicated this strategy would change if the banks did not respond satisfactorily.

“There will be a distinction between those who are being helpful and those that aren’t,” one Minister said after the Cabinet meeting. “We won’t be talking about ‘the banks’. If there are banks that aren’t being helpful, that will be recognised. If there are others that are being helpful, that will be recognised too.”

‘Helpful’

It is understood Mr Donohoe did not indicate at Cabinet which banks are being helpful and which are not. There was wide support for the Government’s stance from Ministers. Sources said it is hoped the banks will co-operate before sanctions are necessary. KBC and Bank of Ireland lagging peers.

There is a growing expectation that the two lenders lagging behind their peers in starting a redress and compensation plan for affected customers, KBC Bank Ireland and Bank of Ireland, will now comply with the Government’s demands.

The Government has asked for a clear timetable for compensation for all customers, which Ministers have said must be under way by Christmas.

A sticking point with KBC and Bank of Ireland has been the status of some customers and whether they would be eligible for inclusion in compensation schemes. These would be in addition to the 13,000 who have already been identified as part of a Central Bank of Ireland investigation into the controversy.

A further 7,100 cases had already been resolved before the Central Bank began its investigation, two years ago, and the status of another 7,000 customers is in dispute.

Mr Donohoe told his Cabinet colleagues he wanted clarity on these issues this week. He also pointed out he would be dealing with some banks as a shareholder, suggesting he might have more leverage with these.