Ulster Bank Set Asides €206M For Mortgage Redress Scheme

Ulster Bank in the Republic set aside €206 million last year to cover the costs of a mortgage redress scheme for customers who were denied a tracker interest rate on their homes loans over the past decade.

This emerges in the bank’s latest statutory accounts, published Friday, and is to cover “potential remediation and project costs”.

Ulster Bank had previously set aside €5 million in 2015 to cover the cost of the scheme, which is part of an industry-wide review of tracker mortgages ordered by the Central Bank of Ireland in December 2015.

The accounts state that the bank has begun to write to the impacted customers.

The bank also last year booked a provision of €11 million to cover costs associated with a review of how Ulster Bank treated SMEs post the 2008 financial crash.

This sum is to cover the refund of certain “complex fees” and to manage a complaints review process.

It stems from the findings of the Tomlinson Report in the UK in 2013, which was critical of Royal Bank of Scotland’s treatment of SMEs from 2008 onwards.

In addition, Ulster Bank was fined €3.3 million by the Central Bank last year for breaches of anti-money laundering and terrorist financing regulations.

The accounts show that Ulster Bank made a profit of €37 million in 2016, down from €1.09 billion a year earlier. This difference was due largely to a steep reduction in its impairment gain, down from €929 million in 2015 to €138 million last year.

In addition, its operating expenses increased by 40 per cent to €772 million. The was driven by €199 million of costs relating to the mortgage tracker review.

Staff costs reduced by 13 per cent to €241 million, driven by a decline in headcount and a €24m reduction in its defined benefit pension scheme costs. Employee numbers reduced to 2,451 from 2,685 a year earlier.

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