AIB and KBC in focus as thousands more tracker cases identified

Banks have until close of business on Monday to submit updated figures to Central Bank

The country's banks are set to acknowledge thousands of additional cases of overcharging next week as the Central Bank presses them to finally draw a line under a tracker-mortgage scandal stretching back as far as almost a decade, according to sources.

AIB, which has so far identified up to 4,602 customers who were either wrongly denied low-cost loans tied to the European Central Bank benchmark or charged the wrong rate, and KBC Bank Ireland, which admitted in October to as many as 1,661 cases of overcharging, are preparing to announce upward revisions as updated figures are published next week.

The Central Bank launched an industry-wide examination of tracker mortgages in 2015, five years after it first forced Bank of Ireland, Permanent TSB and KBC to restore thousands of their customers to tracker mortgages. Banks at the time were seeking to minimise the number of customers on ECB-tracker loans, as their own borrowing costs soared during the crisis to well in excess of official central bank interest rates.

While the number of acknowledged affected customers has increased incrementally across the banks over the past two years, lenders have come under increased political and regulatory pressure in recent months come up with final figures and complete refunds and compensation at pace.


Eleven current and former mortgage lenders have so far acknowledged as many as 27,527 cases, mostly across the five remaining retail banks. The five have so far set aside €800 million of provisions to cover refunds, compensation and other costs related to the examination.

Intensive engagement

Regulators have been locked in intensive engagement with all the banks since they submitted their latest updates to the Central Bank ahead of a deadline of September 30th. Minister for Finance Paschal Donohoe is expected to publish an update on progress next Wednesday.

It is understood that the banks have until the close of business on Monday to submit updated figures. There were indications on Friday that the industry figure for impacted mortgage holders may breach the 30,000 level as a result, including more than 7,000 cases resolved in 2010.

Bank of Ireland came out early last month to confirm an additional 6,000 cases of affected customers, as the move forced the bank to ringfence up to a further €175 million of provisions, which needed to be disclosed to the stock market.

The bank had previously set aside €25 million to cover 602 customers wrongly denied a tracker mortgage and 3,700 who were on the wrong rate.

AIB said last week in a trading update to investors that it did not expect any “material” increase in the €190 million of tracker-related provisions it has taken to date.

The bank’s chief financial officer, Mark Bourke, said on a call with analysts on December 5th that the Central Bank was reviewing AIB’s tracker examination figures, including “cohorts” of customers that were and were not included by the bank.

Spokesmen for AIB, Bank of Ireland and Permanent TSB declined to comment on tracker figures each of the companies are planning to release next week. Spokeswomen for KBC and Ulster Bank also declined to comment.

A spokeswoman for the Central Bank said the tracker review “continues to be a priority” for the regulator and that it was engaging “proactively with all lenders, who must ensure that all impacted customers are identified and redressed and compensated”.

While industry sources said it was hoped that next week’s release would largely bring an end to a pattern of regular upward revisions in the number of customers caught up in the scandal, the Central Bank was not expected to complete its validation work until well into next year.

Joe Brennan

Joe Brennan

Joe Brennan is Markets Correspondent of The Irish Times