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Bank of Ireland ups UK lending by £400m as tracker scandal costs hit £169m

  • 26/02/2018
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Bank of Ireland ups UK lending by £400m as tracker scandal costs hit £169m
The Irish tracker scandal has cost Bank of Ireland approximately £169m (according to exchange rates on 31 December) so far, but the lender increased its UK lending by £400m in 2017.

As part of its annual results the lender said one of its key UK objectives for 2017 was to continue developing its mortgage business while maintaining the progress it had made in recent years.

It did this by increasing its new mortgage lending to £3.2bn from £2.8bn.

This would indicate a slight increase in market share to around 1.24%, from 1.1%.

The lender said its Irish mortgage business performed strongly with around £1.78bn of new residential mortgage lending in Ireland, up 41% from 2016, with an increase in market share to 27% in 2017 compared to 25% in 2016.

And it said it expected to re-enter the Irish mortgage broker market later in 2018 to further support growth in its mortgage business.


Tracker scandal

However, much of the bank’s activity has been overshadowed by its involvement in the tracker rate scandal affecting its home market in Ireland.

The Irish regulator launched an inquiry into 15 lenders in December 2015.

Almost 35,000 customers are known to have been either denied a tracker rate or charged an incorrect rate by their bank, with the total number likely to rise further in the coming months.

In its results, Bank of Ireland (BoI) noted that it had identified around 6,000 accounts where a right to, or the option of, a tracker rate was not appropriately provided to the customer.

It also identified a small rate differential (average 0.15%) on around 3,300 tracker mortgages which was not the appropriate rate specified in the loan documentation.

As a consequence, it has incurred a charge of £151m during 2017 primarily for redress and compensation. During 2016 it spent around £18.7m on the process.



Compensation offers made

Writing in the annual report, Bank of Ireland group CEO Francesca McDonagh, said: “In October 2017, I made it clear that resolving the Tracker Mortgage Examination and ensuring that all impacted customers were compensated as quickly as possible, was a personal priority.

“The group has now largely completed the identification process for all of our impacted customers and all [those] customers have been returned to the correct tracker rate. Offers of compensation and redress have been made to nine out of ten impacted customers and we are making great efforts to contact the remaining customers.

“Our independent appeals panels are now fully in place as an integral part of the Tracker Examination Framework. We expect to complete all payments to customers, subject to their agreement, by the end of March 2018,” she added.

Overall BoI saw its profit before tax fall to about £758m, down from £921m in 2016.

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