Ulster Bank has admitted to overcharging almost twice as many tracker mortgage customers than previously disclosed, as the scale of the industry-wide scandal continues to grow.
Gerry Mallon, the chief executive at Ulster Bank, yesterday confirmed that the bank overcharged 3,500 borrowers by incorrectly moving them off cheaper low-interest tracker rates.
Ulster Bank previously admitted to overcharging 2,000 customers and last year set aside €206 million to redress customers.
Ulster Bank’s revised estimation brings to about 23,500 the number of Irish borrowers caught up in the country’s tracker scandal.
Earlier this year, Philip Lane suggested lenders might have colluded to intentionally deny borrowers the interest rates they were entitled to.
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Mr Lane admitted that the scandal was systemic across the entire banking sector and amounted to a “massive failure” in consumer protection.
Mr Mallon yesterday confirmed the lender was also forced to set aside a further €39 million to deal with newly discovered errors in other parts of its lending business uncovered as part of its investigation into the tracker scandal.
In an interview with The Times, Mr Mallon said he could not provide details as to the number of customers affected or the nature of the errors.
The bank did not know the precise details of the issues either, he added.
“They’re not tracker related [but rather] personal mortgage customers and business lending customers. It’s too early to go into specific details and the nature of the errors or problems but I think we’ve been appropriately conservative in terms of the nature of the provisions so we can cover anything we need to do to put customers right or pay for the project costs,” Mr Mallon said.
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It’s understood the errors were uncovered in recent months.
Ulster Bank yesterday reported an adjusted operating profit of €104 million for the first half of the year compared with €155 million in the same period of 2016.
Mr Mallon said the bank’s operating profit - which rose from €9 million to €12 million - was a better reflection of its financial performance during the period.
Its adjusted profit was affected by once-off restructuring costs, smaller writebacks and a decline in its hedging income.
New lending increased by 11 per cent to €1.3 billion during the period while it also recorded a 10.3 per cent increase in customer deposits compared with the opening half of last year.
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Mr Mallon said the rise in new lending was due to an increase in both mortgage and commercial customers.
“I wouldn’t be overly fixated on market share [for mortgages] because the market is growing very rapidly and chasing market share in a rapidly growing market isn’t always the wisest thing to do.”
He said strong demand in the mortgage market was justified by the pace of economic growth in Ireland and said while he agreed with the Central Bank’s mortgage lending rules, there were some changes he would like to see made.
Mr Mallon said the regulator’s loan-to-income ratio, which restricts the amount of money a homebuyer can borrow to 3.5 times their income, was a “slightly crude metric” and suggested an affordability assessment that took account of customers’ “broader financial constraints”.
Ulster Bank’s stock of impaired loans fell by €1.2 billion, or 23.1 per cent, reflecting a combination of asset sales and the improved performance of some loans.
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Mr Mallon said there was “less scope” to sell mortgage loan books than commercial portfolios and said there were “certainly no immediate plans” to make further loan sales.