The Irish Independent reports that Ulster Bank is
demanding that more than 1,000 customers pay back around €30,000 each after a
blunder involving under-charging on mortgage accounts.
The error involves at least 1,300 customers from whom a total amount of
around €41m was not collected from their accounts over a period believed to span
between three and four years.
Those who have already been notified are reported to be "distraught" while it
is thought that many of the customers have not yet received notification.
It is the latest scandal involving Ulster Bank, which caused widespread
disruption in the middle of last year when its IT systems went down for weeks on
end, leaving many people without wages or cash.
When contacted by the Irish Independent, Ulster Bank refused to reveal how
many customers were affected, over what period the error had occurred, or what
amounts were involved.
A brief statement said: "Ulster Bank self-identified an under-payment error
affecting some mortgage accounts.
"All impacted customers are being contacted, given time to make repayments
and (can) choose from a number of repayment options."
The bank also refused to say whether it would be charging interest on the
repayments it is now seeking.
The underpayment errors arose from the transfer a few years ago of First
Active mortgage customers to Ulster Bank.
Affected customers had taken out mortgages, mostly during the boom years,
opting for products which offered a front-loaded capital-repayments "holiday" of
over three years.
During this time, they would repay interest only. After the "holiday"
expired, they agreed to pay interest and capital repayments.
However, in most cases, the bank did not seek the capital repayments after
the "holidays" expired.
The sums now being sought are these non-deducted payments.
Personal finance consultant John Lowe said he has "several clients" who have
been sent letters demanding the return of large sums.
"They are not too happy. The letters say: 'We are sorry to tell you
that we have undercharged you by X, please can you repay X.' They then list
four or five payment options. However, 'can't afford to repay' isn't on the
"There is, however, an argument here that customers who took on a
capital-payments holiday should have realised when that period was due to
run out and contacted their bank when it didn't.
"So perhaps the customers aren't entirely blameless but of course
it doesn't say a lot for Ulster Bank."
The Central Bank confirmed it had been made aware of the problem.
"The Central Bank was notified by Ulster Bank Ireland of an
under-collection error and is working with them to ensure that all impacted
consumers are treated fairly.
It said it believed the problem related to "around 1,300" account
The office of the Financial Services Ombudsman said the problem had
not yet been brought to his attention, and added that consumers are usually
obliged to adhere to the terms of the contracts they had originally signed.
Dermott Jewell of the Consumers' Association said few bank
customers keep tabs on their accounts. "They pay what they're asked to pay.
That's how it works."
He said the association would be demanding the bank does not charge
interest rates to customers to enable them to profit from their own error,
and added that it would be seeking the facilitation of repayments "over very
prolonged periods to ease the pain of the consumers involved."
The Irish Independent also reports that the European Investment Bank (EIB)
expects to make €600m in low-cost loans to projects and companies in Ireland
this year, its new vice-president Jonathan Taylor has told the Irish
Mr Taylor and senior officials from the EU-controlled bank are in Dublin for
a series of meetings, with the hope they can drum up interest in the bank's
The team from the Luxembourg-based EIB are today meeting separately with the
three main economics ministers, Michael Noonan, Brendan Howlin and Richard
The news comes as the Government announced a €300m package of funding to
suppport high-end scientific research.
Identifying sectors where there are investment gaps that could be funded
through the EIB, and removing any regulatory obstacles to investment are
understood to be among the topics on the agenda.
It is also Mr Taylor's first visit to Ireland since he took over as
vice-president at the bank, where he is directly responsible for Irish lending.
Last year the EIB and the Department of Finance set up a joint working
committee to coordinate investment activity.
Officials from the EIB are also holding talks with the National Asset
Management Agency (NAMA) and the banks, as well as with representatives from the
Last year the EIB loaned €505m to projects in Ireland, mainly working with
That included financing schools construction, energy and water
infrastructure, and working with AIB and Bank of Ireland to boost lending to
small and medium enterprises (SMEs).
Mr Taylor said his agency was in Ireland seeking more lending opportunities
with the public and private sectors.
The EIB can lend to any borrower if the project involved meets the agency's
criteria, including promoting growth, he said.
The bank typically co-invests in deals alongside a joint venture partner on a
Traditionally, the bank is most associated with funding infrastructure but
can back a range of sectors, including support for financial ventures or support
for research and development (R&D).
It can lend to businesses regardless of who owns them or where a
corporation is headquartered, as long as the relevant project is in the EU,
In the UK, the bank backed development of an electronic car by the
local subsidiary of Japan's Nissan in 2011.
EIB officials are also hoping to re-open public sector partnership
deals that see private investors working alongside state entities to finance
Meanwhile, the Government and Science Foundation Ireland announced
a new €300m R&D package to be funded by a combination of state and academic
finance and by the private sector.
The funding is aimed at boosting the profile of academic research
here and attracting foreign investment.
The Irish Times reports that
AIB, Bank of Ireland and Permanent TSB will no longer have to pay up to €1.1
billion a year to the Government in fees for the bank guarantee scheme following
the announcement yesterday that it will end on March 28th.
The Minister for Finance Michael Noonan said the
“time was right” to end the controversial guarantee, which was introduced on
September 30th, 2008, to prevent the collapse of the Irish financial system.
He said this decision, which had been well
flagged by the Government, would help the three banks to “get back to normal”.
About €73 billion of liabilities is currently
covered by the scheme, including €55 billion in deposits.
Mr Noonan said the ending of the Eligible
Liabilities Guarantee Scheme (ELG) would enable the banks to return to
profitability, which in turn would boost the value of the State’s shareholdings
in them over time.
Mr Noonan said it should also reduce the State’s
borrowing costs and assist with our exit from the EU-IMF bailout programme at
the end of this year.
The Minister said he did not expect a flight of
deposits from the three banks as a result of the guarantee ending.
“We don’t believe any capital will move,” he
The guarantee had already been removed in
relation to about €12 billion in eligible deposits in the UK with “no adverse
AIB and Bank of Ireland will be the biggest
beneficiaries from the ending of the scheme.
AIB paid €488 million in fees to the State in
2011. It has yet to publish the figure for 2012 but it paid €215 million for the
first six months of last year.
Bank of Ireland paid €449 million in 2011 and had
contributed €1.2 billion in total by the end of June 2012.
Its chief executive Richie Boucher has made no
secret of his desire for Bank of Ireland to exit the scheme.
Mr Boucher has the strongest hand to play given
that the State owns just 15 per cent of Bank of Ireland, compared with about 99
per cent in the cases of both AIB and Permanent TSB.
The Government earned €3.8 billion in fees from
the guarantee up to the end of 2012.
It expects to receive €430 million this year and
there will be residual payments over the next five years as various liabilities
Liabilities up to March 28th will be covered
subject to a maximum of five years.
Mr Noonan said the loss of the fees from the
scheme were worked into the arithmetic for last December’s budget and would have
no “negative impact” on the country’s finances.
“We have been planning for this since late last
year,” he said.
Bank of Ireland “welcomed” the ending of the
In a statement, David Duffy, chief executive of
AIB, said: “The ELG was introduced as a measure to stabilise the financial
system at a time of unprecedented market turbulence, which is no longer evident.
“We welcome the announcement and expect this move
will have a positive impact on the operating performance of AIB over time as the
bank returns to long-term sustainability.”
Permanent TSB also backed the Minister’s
A spokesman for the bank said: “This is a further
sign that the Irish banks – including Permanent TSB – are now able to fund their
ongoing activities in the market without the requirement for Government support
and that’s to be welcomed by all.”
The Irish Banking Federation said the
Government’s decision “marks a further significant step in the normalisation of
our banking system”.
The decision to end the guarantee will not affect
the vast majority of deposit holders at the three covered banks.
These are protected by a separate deposit
guarantee scheme, which applies to funds of up to €100,000 per institution for
individuals and double that amount for joint accounts.
Almost 98 per cent of depositors at AIB, Bank of
Ireland and Permanent TSB come within that threshold.
What was the Eligible Liabilities
Guarantee Scheme (ELG)?
Better known as simply the “bank guarantee”, it was introduced in controversial
circumstances on September 30th, 2008, by the previous Fianna Fáil-led coalition
to guarantee the liabilities of Ireland’s banks when our financial system was on
the edge of collapse at the height of the global credit crunch.
It was one of a series of decision that led to the taxpayer spending €62 billion
bailing out Irish-owned banks.
In simple terms, it was a blanket guarantee that the State would meet the
obligations of the banks to depositors and bondholders in the event that they
couldn’t meet their liabilities.
It was initially for a period of two years but was subsequently extended. The
current scheme will be closed to new liabilities from midnight on March 28th.
Liabilities will continue to be guaranteed until their next maturity, subject to
a maximum term of five years.
What was covered by the scheme?
It currently covers all deposits held by Bank of Ireland, AIB and Permanent TSB
and certain bonds issued by the banks.
The State is currently covering about €73 billion in liabilities, of which €55
billion relates to deposits and the balance to bonds.
What does the ending of the guarantee means for retail depositors?
The deposit guarantee scheme (DGS) covers funds up to and including €100,000 per
depositor, per credit institution. Double that amount is covered in the case of
a joint account.
Credit union funds were never covered by the ELG scheme. However, members’
savings in credit unions are covered by the terms of the DGS.
How much were the banks paying in fees to be covered by the ELG scheme?
Last year, the three banks paid €1.1 billion to the exchequer for the guarantee.
How will the State now make up this shortfall?
The ending of the ELG was worked into the arithmetic for last December’s budget
so there will be no nasty surprises for taxpayers as a result of it ending.
The State expects to receive €430 million this year in fees from the banks and
there will continue to be some residual payments as the guarantee winds down
over five years.
Minister for Finance Michael Noonan said yesterday that the ending of the ELG
would benefit the State via lower borrowing costs on capital markets as the risk
of a sovereign default lessens from no longer having to guarantee these
It would also enhance the value of the State’s shareholdings in the three banks
over time as they would now be able to move to profitability more quickly by not
having to pay the fees associated with the scheme.
The Irish Times also reports that
the proposed sale of the right to harvest trees in State-owned forests could
cost 2,500 jobs and close the Republic’s sawmilling industry, a new report
Government agency New Era is due to report to
Minister for Agriculture Simon Coveney next month on the proposed sale of the
right to harvest trees in forests owned by State company Coillte.
The sale, which it is estimated could raise
between €400 million and €600 million, is part of a programme of State-owned
asset disposals proposed by the Government a year ago in a bid to raise a total
of €3 billion.
Yesterday, the Irish Timber Council, which
represents the sawmill industry, published a report which warns that the move
could force the closure of the Republic’s 10 sawmills, with the loss of 2,500
jobs in mainly rural areas.
Coillte supplies 80 per cent of the logs milled
by the organisation’s members. Its chairman, Pat Glennon, explained yesterday
that it believes there is a risk that a buyer could choose to export the bulk of
the harvest, leaving the mills with almost no raw material.
Alternatively, a buyer could choose to drive up
prices by withholding or controlling supply, particularly as they would have no
commercial imperative to supply the mills at regular intervals, which Coillte
“There is no room for sawmill operators to absorb
any level of price increase and the consequence is that sawmills could close
with important employment being lost in rural areas,” Mr Glennon said.
The Minister has suggested any deal would involve
some level of guarantee for the sawmills. However, Peter Brennan, managing
director of EPS Consulting, which produced the report, said this could depress
the price at which the trees could be sold.
The Irish Examiner reports that
Ireland will post a healthy export performance over the next 17 years — helped
by rising trade with China, which is expected to become the fourth biggest
destination by 2030, according to HSBC’s global trade forecasts.
“Although Ireland’s main export markets of the UK, USA, and Germany will remain
the top three destinations, the main growth areas for its exports lie in
emerging Asia,” said HSBC.
“This is evidenced by forecasted growth in exports to China of 11% per annum in
the period 2016-2030.
“Alongside China, the forecasts also show India and Vietnam as the
fastest-growing export markets to 2030, with Malaysia and Indonesia also
becoming increasingly important.”
Ireland’s overall export performance is expected to be relatively favourable
compared to its Western European peers. (HSBC appears to be confused by the
Irish data. About 94% of exports to China are made by foreign firms, not
indigenous Irish firms - - Finfacts)
Growth in merchandise exports from Ireland is, for example is expected to
outstrip the UK, France, and Germany in the period 2021-2030, the bank added.
Exports to Turkey and the Middle East will also become more important.
Exports will be driven by chemicals, pharmaceuticals, scientific apparatus, and
Ireland has a good foothold in all of these sectors on the back of healthy flows
of foreign direct investment over the past few decades.
Managing director and Ireland head of HSBC corporate banking, Alan Duffy, said:
“Exports continue to play a key role in Ireland’s GDP growth and whilst our
traditional export markets remain vital to this, it is increasingly important to
look beyond them.
“Emerging markets are developing at a phenomenal pace and are set to reshape
world trade patterns over the next 20 years.
“Understanding which sectors are growing in which markets delivers huge
opportunities for businesses as they plan for the future and aim to capitalise
on these trends.”
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