Ulster Bank CEO says mortgage redress work will take months

Ulster Bank's new chief executive Gerry Mallon has said it will be months before it has completed its work on establishing how many mortgage customers are due redress for not having the correct tracker rate applied to their accounts.

The bank took a provision of €118 million in the first half of the year to cover the costs of this issue. It also revealed that it has been put on notice by the Central Bank that it faces a sanction for its failure to apply the correct tracker rate between August 2006 and June 2008.

On the question of how many customers are affected by this tracker issue and how many lost their homes by not having the correct rate applied to their loans, Mr Mallon told The Irish Times: "It's really too early to give very much by way of detail. There are two reasons. One is the volume of the work – there are a lot of customers to be considered; and second is the complexity of the work, as every customer's situation needs to be considered.

“Then it needs to be verified and it’s only then that we’ll be able to talk details. It will be months before that will be completed.”

Mr Mallon is “hopeful” that all of the costs associated with this issue will not exceed the €118 million set aside by the bank.

Customer trust

On how it might impact the bank’s target to be number one in the market for customer trust, he said: “Obviously, in terms of customer trust, you’d rather not be having to address historical conduct issues. It’s clearly disappointing for us to have to do that.

“I’m not sure this isn’t a sin of omission rather than commission for us. But, regardless of the root cause, the focus has got to be about building customer trust through doing the right thing now and into the future.”

Ulster Bank reported a reduced adjusted profit of €155 million for the first six months of this year, from €199 million last year. However, when restructuring costs of €32 million and the provision for the tracker mortgage review are taken into account, its operating profit was just €9 million, down from €190 million a year earlier.

The bank had impairment releases of €34 million in the period, down from €105 million a year ago.

Ulster Bank improved its share of new mortgage lending to 18 per cent in the first quarter of this year and Mr Mallon said this was due primarily to “hard work on the front line”, its mobile mortgage manager team, and its re-entry to the broker market.

He said the bank was now more “visible” in its marketing and was “trying to stay sharp and competitive”.

Ulster Bank in the Republic is now operating separately from Northern Ireland, which reports into Royal Bank of Scotland’s operations in Britain.

On the implications of Brexit, Mr Mallon said the UK's decision to leave the European Union had given Ulster Bank in the Republic "some added strategic significance, given the fact that we're now RBS's passported bank in the EU".