€35m to compensate bank customers

ULSTER BANK has set aside €35 million to compensate customers affected by the computer breakdown in June and July but the bank’s chief executive Jim Brown said he expects this figure to rise by tens of millions of euro more.

The bank’s parent, Royal Bank of Scotland, said the computer error, which stopped hundreds of thousands of Ulster Bank’s 1.9 million customers accessing their funds, had been “largely rectified”.

RBS estimated the cost of redressing the errors, primarily covering payments to customers, at £125 million (€156 million) across the group, including the £28 million (€35 million) to compensate Ulster Bank customers.

“Given the scale and impact of the incident on Ulster Bank we expect that that [€35 million figure] would climb,” Mr Brown told The Irish Times. “I wouldn’t be surprised if we saw tens of millions [of euro] on top of that.”

Ulster Bank has started reversing fees and charges for customers, he said, and the bank was hoping to finalise details of how customers would be compensated for losses or out-of-pocket expenses they incurred shortly.

The bank was in discussions with the Central Bank and consumer groups on proposals for compensating customers, he said.

Even though Ulster Bank was the worst affected, RBS set aside higher costs to cover the customers affected in the lender’s UK retail and corporate divisions

The bank said that “additional costs may arise once all redress and business disruption items are clear” and a further update on the cost of the disruption will be given in the third quarter of the year.

Mr Brown said that the “vast majority of accounts are back to normal” but that the “odd transactional issue” may still emerge.

The investigation by independent experts law firm Clifford Chance into how the computer error occurred at the RBS transaction processing centre in Edinburgh on June 19th will be completed “in weeks” and their findings will be made public, he said.

Publishing results for the first half of the year, RBS said it set aside £36 million for its UK corporate and £35 million in its UK retail divisions primarily to compensate any affected customers.

A further £21 million was set aside in the international banking division, while £5 million was set aside for the group’s centre.

RBS said no customer data was lost or destroyed by the glitch.

“Regrettably, in Ulster Bank, our customers experienced extended problems with their accounts, which have now been largely rectified,” the bank said.

Investigators examining the causes of the problem will be reporting to the RBS board risk committee and the inquiry will consider both the bank’s operations and “the role of third parties”.

The review will also examine how the bank responded to the computer error that affected customers for almost a month.