Bank of Ireland tracker refunds and compensation bill tops €138m

The cost of refunds and compensation to Bank of Ireland customers caught up in the tracker mortgage scandal has topped €138 million, the bank will tell the Oireachtas finance committee on Thursday.

In documents sent to the committee ahead of the the appearance of chief executive Francesca McDonagh, Bank of Ireland said it had offered a total of €137.3 million to 99 per cent of borrowers affected by the controversy.

The bank has also earmarked €1.1 million for the final 80 people, which it is having difficulty tracking down.

The bank said the number of accounts identified as impacted by a tracker-mortgage examination ordered by the Central Bank in late 2015 had increased by 13 since March, to 9,345. That is in addition to 5,100 cases which the bank was forced to rectify in 2010 where borrowers were on the wrong rate.

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"The tracker issue became a key focus of mine shortly after I took up my position as CEO last October," Ms McDonagh will tell the Oireachtas committee in her opening address, according to submissions filed in advance and seen by The Irish Times.

Appeals

Ninety per cent of the sums offered to impacted borrows have been paid out so far. Some 317 customers have lodged appeals through an independent process against the amount they were offered, according to the documents. About 45 per cent of these have been upheld, increasing compensation awards to €3,266 on average from €2,091.

The estimated €138.4 million final redress and compensation bill equates to almost 71 per cent of the total €195 million of provisions that Bank of Ireland set aside in the past two years in an effort to draw a line under the matter.

It is not clear if some of the amount covers a possible Central Bank fine, as the regulator pursues enforcement investigations against the State’s five main mortgage lenders.

Separately, Ms McDonagh will outline to the Oireachtas committee how the bank is currently funding the construction of almost 3,000 residential units and 1,700 student accommodation beds in Ireland, and are supporting development on 160 sites across the State.

Ms McDonagh outlined her grand medium-term vision for the bank last month to investors in which she plans to increase the size of the bank’s loan book by 20 per cent by the end of 2021, driven by a resurgent Irish economy. The bank also plans shave €200 million of costs and double the profitability of its underperforming UK unit over the period.