Bank of Ireland to compensate further 6,000 customers
November 09 2017 07:19 PM
Bank of Ireland
Bank of Ireland

Reuters/Dublin

* Government threatened increased bank levy
* Compensation trims core capital to 12.5% from 12.8%
* New CEO says substantial progress made on tracker issue

Bank of Ireland will make a 150 million euros ($174 million) to 175 million euro provision this quarter to cover compensation for an additional 6,000 mortgage customers it overcharged, the lender said on Thursday.

Irish lenders are under threat of being penalised by the government if they do not speed redress for at least 20,000 borrowers who should have paid less on their mortgages.

The industry-wide compensation scheme concerns customers who should have been given the option of a cheaper ‘tracker’ mortgage that follows the low European Central Bank rate or kept on a better rate years ago

Bank of Ireland said its core tier 1 capital ratio would fall back to 12.5 percent from 12.8 percent as a result of the provision, wiping out the increase in capital it recorded in the third quarter.

The additional customers included on Thursday brings the total number due compensation from the bank to 10,300, by far the most identified by any lender under the review so far.

Ireland's largest bank by assets had previously set aside 25 million euros for compensation - less than Ireland's other four retail lenders.

The bank's shares fell 2.5 percent on the news but recovered to stand 1.2 percent down at 6.47 euros by 1520 GMT.

‘Since taking up the role of CEO in October, making progress on the tracker issue has been a top priority,’ Bank of Ireland's new CEO Francesca McDonagh said in a statement.

‘We have since made substantial progress in relation to the issue ... The compensation process is commencing and our priority is to ensure that all impacted customers are compensated as quickly as possible.’

Finance Minister Paschal Donohoe has said he will decide by mid-December whether banks have made sufficient progress to avoid potential sanctions including an increase in its annual bank levy, stricter reporting requirements or shareholder action.??



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