Ulster Bank says up to 15 homes were lost due to tracker denials

Some 14 or 15 customers of Ulster Bank may have lost their homes as a result of being denied a lower tracker mortgage interest rate, the chief executive of the bank, Gerry Mallon, told the Oireachtas finance committee on Thursday.

In response to questions from Sinn Féin's Pearse Doherty, Mr Mallon said about 2,000 customers were denied a tracker rate in the past by Ulster Bank's failure to honour contractual entitlements.

He said the bank would begin writing to customers this month and would take “immediate steps” to rectify their interest rates. The bank expects to have this done before Christmas or early in the new year.

Mr Mallon apologised for Ulster Bank’s failure to apply the correct rate. “We can’t have this kind of issue in the future,” he said. “It’s not something we’re proud of.”

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Ulster Bank's review of its mortgage book forms part of an industry-wide review ordered by the Central Bank of Ireland last year. The bank has 200 staff working on the issue.

Mr Mallon said it would be into 2017 before the bank had definitive figures for the numbers of borrowers affected by its failure to apply a correct tracker rate.

Ulster Bank also told Mr Doherty that fewer than 100 Irish SMEs out of a total of 2,141 that were placed into RBS’s controversial Global Restructuring Group successfully emerged from this process.

Compensation

RBS last month set aside almost £400 million (€473 million) to compensate some of the small business owners in Britain and Ireland that allegedly suffered at the hands of its restructuring unit after the financial crisis.

RBS said it “could have done better” for the 12,000 small business customers served by its now-defunct restructuring group but rejected allegations that it tried to profit from their plight.

The UK bank has launched a new process to look at complaints from SMEs about their treatment in the restructuring group.

Ulster Bank indicated to the committee that some Irish SMEs could be compensated as part of this process. The Irish SMEs placed into the restructuring group typically had problem loans valued at between €1 million and €25 million, with large commercial property exposures.

Mr Mallon said he didn’t perceive a need for the Central Bank to investigate the treatment of the Irish SMEs in the restructuring group, although it had informed the regulator about RBS’s new process and its application in Ireland.

Andrew Blair, Ulster Bank's head of problem loans, said the role of the restructuring group was not to "distress companies in any way". He said the loans associated with about 1,800 of the Irish SMEs placed into the unit were sold to investment funds. These loans had a face value of about €14 billion.

Regulatory Costs

In terms of new business, Mr Mallon said Ulster Bank’s lending activity had increased by 26 per cent year-on-year, with€970 million of new lending facilities to business customers and €810 million in personal lending.

Its new mortgage lending was up 49 per cent compared to quarter three of 2015, with its market share increasing by 4 per cent on last year.

Mr Mallon said increasing regulatory costs were an issue for the bank, representing about 9 per cent of its total cost base and hitting its cost-income ratio by around 7 per cent.

Separately, Bloomberg has reported that RBS could implement more cuts at Ulster Bank in Ireland after flunking Bank of England stress tests, citing analysts at UBS Group.

"The current Irish efficiency position looks untenable," UBS analysts led by Jason Napier in London wrote, adding that "the market will be looking for evidence of delivery in 2017" on cost efficiency measures.