Ulster Bank eyes tracker mortgage redress clarity by year end

Ulster Bank has said it expects to have more clarity on the scale of its tracker mortgage redress programme by the end of the year, for which it has set aside €118m in compensation provisions.

Speaking yesterday, on the back of a relatively positive set of half-year results, Ulster’s chief executive for the Republic Gerry Mallon said that the bank is at a very early stage in the process — moreso than the other major banks — and it remains too early to know how many customers are affected.

He said the €118m provision — announced yesterday — should be sufficient, but there is scope for the total to go “either way”, adding that a clearer picture should emerge by the end of the year.

AIB has already set aside €190m to cover its potential redress from the Central Bank’s ongoing industry-wide probe into tracker management by lenders.

Permanent TSB has set aside €140m and Bank of Ireland has begun contacting customers but hasn’t published a total provision figure.

Mr Mallon said the issue, with regard to Ulster Bank, relates to it having been “insufficiently clear” with some customers over their interest rate entitlements. He added it is the bank’s “main objective” to rectify the matter.

Ulster Bank will also, shortly, be submitting its recommendations for the Central Bank’s review of its controversial mortgage lending rules, but remained tight-lipped on their nature yesterday.

The Central Bank is due to review its mortgage rules in November and ‘stakeholders’ have until the end of this month to make submissions.

Ulster Bank’s first half figures showed an adjusted profit of €155m, down just over 22% year-on-year, but also a €9m rise in total income to €377m.

Operating expenses jumped from €283m to €402m, partially due to the tracker provisions.

Impairment releases amounted to €34m, compared to €105m in the first half of last year.

Mortgage drawdowns jumped by 47%, with the bank’s homeloan market share (in the first quarter) rising from 14% to 18% and its customer arrears levels continuing a downward trend.

The bank also said that its business banking division picked up pace in the second quarter with that momentum set to be built upon in the second half of the year.

The Financial Services Union (FSU) welcomed Ulster Bank’s financial progress but called on its owner RBS to share its vision on the bank’s future and “reaffirm” its commitment by way of a long-term investment strategy.

FSU senior official Gareth Murphy said investment is needed as the bank’s “drive to cut costs and staff has undermined customers’ experience and frontline services”.

Mr Mallon said that Ulster Bank — across the island of Ireland — remains a core element of RBS’ operations.

RBS has wider problems, however, with its interim results presentation yesterday showing a significant widening in group first half losses from £179m (€211m) to just over £2bn and the receipt of £1.3bn in charges relating to restructuring and the settlement of legacy litigation and regulatory issues.

The bank — which is still 78% owned by the UK Government and hasn’t generated an annual profit for nearly 10 years — has also set aside an additional £450m to compensate customers for missold payment protection insurance.

RBS’ share price — down by 40% this year — fell a further 7% yesterday.


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