Ulster Bank sets aside money for Central Bank fine over trackers

RBS-owned lender reiterates plans to sell another portfolio of problem loans this year

Ulster Bank has trailed other mortgage lenders in terms of paying redress and compensation

Ulster Bank has trailed other mortgage lenders in terms of paying redress and compensation


Ulster Bank executives told the Oireachtas Finance Committee on Thursday that they have set aside money to cover a likely Central Bank fine for the lender’s role in the State’s tracker-mortgage scandal.

“We have a provision taken, and we will not be disclosing the amount,” the bank’s chief financial officer Paul Stanley told the committee.

Ulster Bank has set aside a total of €297 million in relation to the tracker-mortgage debacle in recent years. Roughly half of this was ringfenced for refunds and compensation. Most of the remainder covers costs relating to an examination of the bank’s books for cases where customers were denied their right to a loan linked to the European Central Bank’s (ECB) main rate, or put on the wrong rate.

The bank has trailed other mortgage lenders in terms of paying redress and compensation, mainly due to issues with its information technology (IT) systems. About €120 million had been paid out to affected customers by the end of March.

All six main Irish mortgage lenders are currently subject to enforcement investigations by the Central Bank in relation to the scandal. Law changes in 2013 doubled the maximum fine the regulator can impose on firms for rule breaches, to €10 million, or 10 per cent of turnover, and for individuals from €500,0000 to €1 million.

Mr Stanley reiterated that Ulster Bank plans to sell another portfolio of non-performing loans (NPLs) in the second half of 2019, after concluding the disposal of €1.4 billion worth of distressed home loans to US investment firm Cerberus late last year. Ulster Bank is owned by Royal Bank of Scotland (RBS).

The bank has to reduce its impaired loans by up to €1 billion to reach its target of having a NPLs ratio of 5 per cent by the end of next year, according to Mr Stanley. Most of the planned loan sale will comprise owner-occupier loans.

Additional resources

The hearing marked Ulster Bank’s new chief executive Jane Howard’s first appearance before the committee after she took up her role last September.

“We have invested in additional resources to ensure that every customer [in arrears] has every opportunity to engage with us to enter into a long-term solution,” she said.

“We have found that when customers have worked with us, a solution can be found for four out of five, meaning they can remain in their home.”

However, the executives were criticised by Sinn Féin finance spokesman Pearse Doherty TD for using loan sales to so-called vulture funds in recent years.

He highlighted how a debt collection firm, Cabot Financial, used by Cerberus to manage loans acquired from Ulster Bank last year wrote to a number of buy-to-let borrowers last month demanding they pay the full amount of their arrears within 30 days.

Meanwhile, Ulster Bank’s head of personal banking, Ciaran Coyle, said the lender was behind over 16 per cent of all mortgage drawdowns in the Irish market in the first quarter of this year, compared to its “natural stock” in the market of about 14 per cent.