Ulster Bank sets aside €5m to cover mortgage review

Ulster Bank has set aside €5 million to cover the costs of a review of its mortgage book ordered late last year by the Central Bank of Ireland.

This emerges in statutory accounts for Ulster Bank Ireland Ltd, just published. This relates to the business in the Republic.

The industry-wide review is aimed at assessing compliance with both contractual and regulatory requirements relating to tracker mortgages. In cases where “customer detriment” is identified, the bank is expected to provide compensation to customers.

This requires a detailed plan to be submitted to the regulator by March 31st with the banks required to lodge a final report no later than September 30th.

Core capital

The accounts also show that UBIL had €7.7 billion in core tier 1 capital. This equates to a capital ratio of 29.6 per cent, well above the level of buffer that regulators would require the bank to hold.

Last month, Ulster Bank's interim chief executive Paul Stanley told The Irish Times that the company was generating capital again and "heavily capitalised" to the point where it could start returning some of the £15 billion funds to RBS this year.

The accounts show that UBIL made a profit of just under €1.1 billion, aided by an impairment gain of €929 million. This was half the level of profit achieved in 2014, when the impairment gain was €1.7 billion.

UBIL’s total income was €702 million while its operating expenses amounted to €539 million.

The sale of projects Aran, Clear, Coney and Finn contributed to a reduction of about €2.5 billion in legacy assets run down by RBS Capital Resolution Ireland (RCRI). By the year end just €334 million of RCRI assets remained on its balance sheet with plans to deleverage them in the first quarter of this year.

In addition, €245 million of buy-to-let mortgages were sold under Project Arthur in September 2015.

Emoluments paid to executive directors and non-executive board members rose last year by 3.3 per cent to €1.7 million. The highest paid director, who was unnamed, received €711,119. The comparable figure from 2014 was €723,745.