Ulster Bank reduces arrears book

The removal of the Dunne judgment prohibiting banks from repossessing homes has helped Ulster Bank convince customers in arrears to engage with the bank.

The bank has bucked the trend in managing to reduce the number of borrowers in arrears of 90 days or more, every month since March last year.

Ulster Bank chief risk officer Stephen Bell said that new systems and attractive customer solutions have helped that bank to reduce its arrears book.

“The numbers of customers in arrears of 90 days or more has decreased month on month for the past year. In 2013 we decreased our arrears book by almost €1bn and over the same period we have helped 2,500 customers out of arrears of 90 days plus. These figures demonstrate that our approach is working,” he said.

A key component of achieving engagement with customers has been the threat of repossession. There remains 14% of customers who are in arrears who refuse to engage with the bank and are now facing repossession.

The actual level of repossessions has remained quite low due to the length of time it takes to bring a case to court but the bank is actively taking action against customers who refuse to engage with it. Since the bank has begun to move against this cohort the level refusing to engage has fallen from 35% to 14% of borrowers in arrears, it said.

“Our customers who are engaging recognise that there is a cost to living in a home, but we will continue to see legal activity where the customer still does not engage or make any payment.

“However, any customer can take themselves out of this process at any time by engaging and restablishing a formal payment habit. We encourage any customer in financial difficulty to engage with us as early as possible so that we can work together to find the right solution,” said Mr Bell.

Customers who do engage can benefit from a Ulster Banks ‘Economic Concession’ product which can feature an interest rate as low as 0.5% depending on the borrower’s circumstances.

Unlike AIB, Ulster Bank will not be writing off any customers’ debts, arguing that it is better to spread the cost of a single write-off across multiple borrowers than to cherry pick who gets to keep their homes.

“Ulster Bank’s primary objective has always been to help our customers come to a fair, affordable solution which allows them to remain in their homes and the communities which they have chosen. It is vital that our approach is fair for all customers — both those maintaining their mortgages and those who are in difficulty,” said Mr Bell.

The most popular remedy that Ulster Bank’s customers in arrears are using has been reduced repayments with more than 6,750 availing of this option.

While split mortgages have received a lot of attention due to people securing debt write-offs through them, only 69 Ulster Bank customers have been offered split mortgages.