Central Bank forces BoI to compensate extra 6000 tracker customers

Update 5.41pm: Opposition finance spokespeople have issued statements criticising the news that another 6,000 Bank of Ireland customers were wrongly denied a lower cost tracker mortgage.

The bank has also made a decision to move 3,700 of the previously identified customers to a lower tracker rate than they had been offered earlier.

It also said it has continued to review whether further customers should be included in the compensation process and has "agreed to include an additional 6,000 accounts within the scope of the compensation scheme". This brings the total number of impacted customers to 10,300.

Central Bank governor Philip Lane had recently told the Oireachtas Finance Committee that in the case of two institutions, customers had been told they were not impacted when the Central Bank believed they were.

"As a effect, the group will be making an additional provision in its financial accounts in the fourth quarter of 2017 of between EUR150 million and EUR175 million primarily in respect of redress and compensation associated with these additional 6,000 accounts", said the bank.

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 new figure is understood to include 2,000 bank staff that Bank of Ireland was resisting including in its tracker remediation scheme, despite pressure from the Central Bank.

"We have been provided with no information as to why these customers have been excluded up to now", he said.

Bank of Ireland said the first 4,300 customers identified can expect to be compensated by the end of this year.

"Since taking up the role of CEO in October, making progress on the tracker issue has been a top priority", chief executive Francesca McDonagh said.

Bank of Ireland said the reinstatement of mortgages to a tracker rate, with EUR375 million now outstanding, means its net interest margin from "2018 onwards" will fall by one basis point.

"We note the announcement today that, following robust challenge by the Central Bank, Bank of Ireland will now include disputed groups of customers in the tracker examination for redress and compensation", the Central Bank said.

It says it is now working to ensure that compensation payments are made as swiftly as possible to all affected customers.

"I unreservedly apologise to all impacted customers for the financial loss and anxiety this has caused them and their families".

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