# Ulster Bank before the Oireachtas Finance Committee on Thursday



## SaySomething (28 Nov 2016)

notabene said:


> They're in front of the finance committee this week so let's see....



Confirmed on the Committee schedule as 10am on Thursday morning with Gerry Mallon. Airing in Committee Room 2 on the live stream if anybody is interesting in tuning in.


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## Brendan Burgess (29 Nov 2016)

Aisling ellis said:


> Hi what channel can this be watched on is it RTE? I often see clips on the news but was not aware you could watch the live committee session.


http://www.oireachtas.ie/parliament/watchlisten/watchlive/committeeroom2/


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## SaySomething (29 Nov 2016)

For fellow Ulster Bank customers, I highly recommend contacting members of the Committee to see would they be willing to put relevant questions to Ulster Bank on the day. You'll find members' details here: http://www.oireachtas.ie/parliament/oireachtasbusiness/committees_list/fpert-committee/members/


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## Brendan Burgess (1 Dec 2016)

That is normal. It refers to the procedural work of the Committee.  The following are speaking now.

Gerry Mallon , CEO, Ulster Bank Ireland
Paul Stanley - Chief Financial Officer
Andrew Blair  - Head of Problem Debt Management

RBS has confirmed its long term commitment to building a long term systemic bank on the island of Ireland. Brexit has made Ulster more important to RBS as a bank within the Eurozone.

We want to become the best bank in terms of customer treatment and advocacy.

We are focussed on completing the tracker review and other legacy issues.

Mortgage arrears: We want to keep customers in their home. But there is a cost to living in a home. We have helped 22,000 people stay in their home.

We were never part of NAMA and so sold no bad loans to them. So we have had to sell them to vulture funds.

The future must be built on customer trust. We want to be the no 1 bank for customer service, trust and advocacy.

Our share of the mortgage lending market is up 4% (presumably 4 percentage points.)

Our range of rates are available to new and existing customers and are competitive.

Reiterated: WE want to be the no 1 bank for customer service.


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## Brendan Burgess (1 Dec 2016)

*Pearse Doherty 
*
There has been discussion about the future of UB in the 26 counties 

Mallon: There is no question about RBS's commitment to the long term in Ireland. Brexit has increased the strategic value of UB. No one knows what Brexit will be like.  RBS is concerned about losing its passporting rights. We are a key part of their strategic review. 

Doherty 
Review of tracker mortgages. 
How many have you identified in this state that were taken off. 

Mallon:
We are deep in that review. 
We are looking at where we have failed to adhere to the contract or not lived up to our standards of transparency.
The issue is with the second part -
We did some stuff wrong, and I repeat my apology for this. 
It's very complicated as we are working on each case individually.
200 people working on it
The first cohort and the most substantial cohort will be written to this month 

Doherty:  How many have been identified to date 

Mallon: The media specualtioin or around 2,000 is about right 

Doherty: How many have lost their homes 

Mallon: We don't know.  A proportion of the 2,000 will have lost their homes. About 15, but we don't know if that's because of the correct rate or for some other reason. 

Doherty: The 2,000 is industry theft and now you will be forced to give it back to them.  How many have you written to? 

Mallon: None. We will be writing to them this month. 

Doherty: You did not identify them yesterday.  This has been going on since Dec 2015. You are still charging them the SVR. 

Mallon: We are not happy that it has taken so long. But we have to do it right. 

Doherty: 

Mallon: Yes, we will be writing to them before Christmas. We hope to have the rate changed before Xmas but not everyone will be don.


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## SaySomething (1 Dec 2016)

Paraphrasing:
Ulster Bank say that all customers should get a letter by the end of December. They also stated that the vast majority of affected customers should be restored to their tracker rates by Christmas with a further cohort restored into the early New Year.


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## Brendan Burgess (1 Dec 2016)

Doherty: 2141 Irish businesses were sent to the Global Restructuring Group.

Blair: There were allegations that RBS artificially engineered inappropriate transfers to that.
Mason Hayes & Curran in Ireland investigated and saw no evidence that it was not appropriate.
The FCA is now reviewing it.
But they noted that communication could have been better, and the interest rates were not  properly considered, and high fees were charged. 

In relation to Ireland...
We will offer the same redress 

It was mainly Commercial Real Estate in Ireland and not many SMEs. 
Relatively few came out of GRG. 

Doherty: 2141 went in. How many came out?

Blair: Around 100 came out. 

Doherty: That was death row and not a means of recovery. You put in customers with some equity. and grabbed it. 

Blair: The primary role was to restore companies to financial health. We always aim to keep companies vialbe and people in their home. 

The role of GRG was not to close down companies 

Blair:  MHC did not find any evidenc. They investigated the 5 complaints made by customers 

Doherty: A whistleblower said the role was to put companies out of business 

Blair: I would not accept that.  It was mainly commercial real estate. 65% fall in price.  This was an extreme downturn. 

Doherty: Would you welcome the CBI conducting a review of UB of the treatment of SMEs? 

Mallon: I don't think it's necessary.  If we identify broader issues which have not been resolved, we will keep that matter under review. 

Doherty: If it wasn't for the CB asking you to review trackers, you would be telling us today that there was no need for such a review. 

Mallon: I don't see the need for it.  I can't make a comment on the CBI decision making.  We are committed to customer service, trust and advocacy.


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## SaySomething (1 Dec 2016)

Brendan Burgess said:


> Doherty: The 2,000 is industry theft and now you will be forced to give it back to them.  How many have you written to?
> 
> Mallon: None. We will be writing to them this month.
> 
> ...



Tears have been shed. I am praying I get this letter. Pearse Doherty gave them a brilliant grilling. Still watching with interest. Thanks Brendan for typing up the notes.


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## Brendan Burgess (1 Dec 2016)

Sean Sherlock 

Is the MHC report in the public domain?  And could it be? 

UB: No it's not. 

Gerry Horkan: 
I would like to know the breakdown of real estate vs. non real estate.  In the UK, there is hundreds of millions of compensation. but there is no similar process in Ireland. 

UB: We are going through the same process in Ireland. They will be compensated. 

We will look at the issues of complex fees being charged 

GH
But what about viable businesses who lost their business through real estate problems. 

UB: We have to investigate each case separately. But it's hard to disentangle real estate from business problems.  For example, a retail company that borrowed heavily to buy their premises. 

Many were sold to vulture funds and have survived, but we don't have that data. 

Rose Conway Walsh 
But MHC only interviewed 5  . 

UB: We asked them to conduct the review. They chose the people to talk to.  We didn't. There was no evidence that we artificially distressed businesses. 

Kieran ODonnell : When do you expect the review to be completed? 

Blair: probably next year. But wedon't know. 

O'D: Are you interacting with the borrowers? 

Blair: Not, but we will be be - probably in Q1 next year. 

O'Donnell: Was there a separate GRG for Ireland. 

Blair: There was a person in Ireland responsible for the whole of Ireland who reported to the head of the GRG and the head of UB Ireland. 

O'Donnell : Has the CB interacted with you on this matter 

Blair: Yes. We keep them informed. 

ODonnell: have they done any review themselves similar to the FCA 

Blair: No. 

O'Donnell: How did the CBI get involved. 

Blair: We notified them of our review 

O'Donnell: Did you sell 90% of these to vulutre funds, If so it wasn't really a restructuring group. That was a misnomer. 
Blair: The GRG existed long before the financial crisis and still exists today.

O'Donnell : Did you sell some of these loans to Goldman Sachs

Blair: Yes, 
O'Donnell: We are getting calls from people who are under huge pressrue from GS

Blair: The context is the massive decline in the economy where many businesses couldn't recover. We did not sell any loans to NAMA but we had to get rid of non performing loans, so that we could focus on building a good business for our staff and our customers.


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## Brendan Burgess (1 Dec 2016)

Paul Murphy 

Questions about salaries of executives. 

Now on to trackers 

What happens if someone lost their home as a result of losing their tracker: 

UB: WE don't know yet.  We have to agree it with the CB. 

Murphy: What do you think of the new CB rules 

UB:  We welcome them but they are a modest change

Murphy: Are you concerned that the new rules and the Help to Buy mean that some people could borrow 95% of the value. 

UB: We assess each case individually.   It does reduce the minimum deposit for some FTBs. But we will continue to lend prudently.

Murphy: Do you have a vested interest in the increase in prices? 

UB: Yes, a broad increase in prices does reduce the NE overhang. But overall we want sustainable prices and we welcome the CB rules as they restrain exuberant prices in a supply constrained market. We would not welcome a sudden spike in house prices. 

Murphy:  What happens to tenants when you appoint receivers to buy to lets 
UB: We fully respect the rights of tenants. 
Murphy: the rights are limited once you give notice to sell. How many have you evicted in the last 6 months.  
UB: Eviction is an emotive term. 
Murphy: We don't know how many people. But we always seek to sell with vacant possession.


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## Brendan Burgess (1 Dec 2016)

Conway Walsh

Your treatment of borrowers with tracker mortgages conflicts with your commitment to treating customers well.
Someone getting 4 letters over a year is very frustrating.

Your SVR rate is 4.3% . How much would a 0.3% reduction cost you? [ We don't know, we will get back to you.]

Is UB just a cash cow for RBS

Mallon: We have reduced our bad debts significantly so we need less capital. Keeping excess capital in the company costs money which is passed on to customers. So we get rid of excess capital. We have probably the highest capital of any Irish bank.

later: The €1.5 billion is a return of the €15 billion which RBS put into Ulster Bank


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## Brendan Burgess (1 Dec 2016)

Sean Sherlock - Brexit. Didn't listen to it.


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## Brendan Burgess (1 Dec 2016)

Kieran O'Donnell:

The submission you made on the CB mortgage review.

You suggested replacing  Loan to Income with ...

What about people in their 30s who bought an apartment but now have a family. They are paying rent and they are renting out the apartment.  They are caught in a homeless trap.

They are in negative equity on the apartment and paying prohibitive rents on their home.

Mallon:


LTI is a coarse tool.  You and I may have the same LTI. but you may have other debts which make it unworkable.  It works across a portfolio but not on an individual basis.

We have a product for Customers in Negative Equity. We allow a max LTV of 200%.  But they must have the correct LTI. We don't require a deposit on the new property either.


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## Brendan Burgess (1 Dec 2016)

The main work today was done by Pearse Doherty. Michael McGrath doesn't seem to be present today, although he did great jobs with the other lenders. 

Is there any FG TD present?  I have not seen any contribution from any of the FG TDs in any of the meetings with banks, although I have not watched all of it.  There are two FG TDs on the committee.


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## Brendan Burgess (1 Dec 2016)

Gerry Horkan

Have you sold any performing loans to vulture funds?

UB:  Only when they were linked to non performing loans.

Horkan: I have contacts with clients who say that they had fully performing loans, not attached, which were sold. Now the vulture fund just wants to take possession. They can't expand their business.

[This makes no sense. If they are performing, they should be able to refinance to another bank. If they are paying their loan, the vulture fund can't take possession. ]

Horkan: Are you going to close more branches? 

UB: When there was an IT issue some years ago, I ran Danske Bank. We tried to poach Ulster Bank customers but they were extremely loyal to the the UB branch.  We have great customer service in the branches. But customers are using branches less and less. The branch network needs to reshape. 

There will be fewer branches in the same way as there are fewer travel agents. 

We can't answer your question, as the future of technology is unpredictable. 

Danske's decision to go cashless seems to me to be wrong in retrospect


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## SaySomething (1 Dec 2016)

Brendan Burgess said:


> The main work today was done by Pearse Doherty. Michael McGrath doesn't seem to be present today, although he did great jobs with the other lenders.
> 
> Is there any FG TD present?  I have not seen any contribution from any of the FG TDs in any of the meetings with banks, although I have not watched all of it.  There are two FG TDs on the committee.


Michael D'Arcy speaking now. FG TD.


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## Brendan Burgess (1 Dec 2016)

Michael D'Arcy ( At last a FG TD!)

You sold some loans. How do you protect the borrower. [ Already asked and answered a few times.]
A question about the FSO which makes no sense. 

A bank is different from a vulture fund.  The vulture fund might not meet the spirit of the criteria.
If they are over the €3.5m threshold, they can't go to the FSO.

[I took a call, so I don't know if he made any sense in the meantime]

It's Goldman Sachs

How many branches have you in the ROI?  110
How many will you have in 5 years or 10 years?  Don't know.

I'm an Ulster Bank customer. But I have never been asked for information or analysis as a customer of your services?

Do you think that UB has any obligation to customers after you have sold their loan? 

UB: Only if they have a complaint about our behaviour

D'arcy : So they should go to you if they have a complaint

UB:  No. Only if they had a complaint about what happened when we had the loan.


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## Brendan Burgess (1 Dec 2016)

Michael McGrath 

Asking about Global Restructuring Group. [already covered in his absence] 

Do you have a breakdown of the 2,000 trackers between UB and FA

Have you made a decision on the rate? 

[This issue is not relevant to UB - it's an AIB and ptsb issue]


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## SaySomething (1 Dec 2016)

Michael McGrath asked about interest rates applicable to customers after the review.
UB confirm that the rates applied to customers accounts will the the ECB tracker rate as detailed in the original mortgage contract. They will not be 'manufacturing' new rates as part of this process.

To be honest I think Michael was enquiring about the level/percentage of compensation which will be applied but this was not answered.


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## PadKiss (1 Dec 2016)

Hi all
*"MANUFACTURING"*
I believe this statement is of critical importance in the wider aspect of the CB Tracker Investigation. The rates being attempted by PTSB are "manufactured" as are the rates being attempted by AIB which started with ECB plus 4.97% on cases I was dealing with some years ago. I have always claimed these rates are "manufactured" and I find it refreshing (notwithstanding the wrong done by Ulster bank to their customers) that at least one bank has agreed to stop the wrongdoing and not to continue it in another guise as is being attempted by both PTSB and AIB. The deliberate nature of what has occurred will come out eventually across all lenders, that is my intention. Padraic


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## todo (1 Dec 2016)

PadKiss said:


> Hi all
> *"MANUFACTURING"*
> I believe this statement is of critical importance in the wider aspect of the CB Tracker Investigation. The rates being attempted by PTSB are "manufactured" as are the rates being attempted by AIB which started with ECB plus 4.97% on cases I was dealing with some years ago. I have always claimed these rates are "manufactured" and I find it refreshing (notwithstanding the wrong done by Ulster bank to their customers) that at least one bank has agreed to stop the wrongdoing and not to continue it in another guise as is being attempted by both PTSB and AIB. The deliberate nature of what has occurred will come out eventually across all lenders, that is my intention. Padraic



The deliberate nature needs to be exposed, they all knew what they were doing. Their were no systems errors, it came straight from the board room table.


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## Sarenco (1 Dec 2016)

todo said:


> Their were no systems errors, it came straight from the board room table.



I'm not saying that's not the case but if you have any evidence to that effect I'm sure the Central Bank would be very interested to see it - I know I would!

Did Ulster have any fixed rate contracts that provided for a roll-off rate at a "prevailing" tracker rate?  If they don't have to deal with this issue then I'm not sure I would be praising UB for criticising their competitors' decisions in this regard - it's a bit of a cheap shot.

That's not to suggest for a second that I don't agree that the methodology employed by AIB and PTSB to determine what would have been their "prevailing" tracker rate at a point in time when they no longer offered this product to new borrowers is entirely artificial and open to challenge.


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## mister32 (1 Dec 2016)

Semantics

Entirely artificial = manufactured


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## Sarenco (1 Dec 2016)

My point related to the likely motive of the person making the comment - having a dig at his competitors - not his choice of words.

I agree that the post-2008 "prevailing" tracker rates have been manufactured.


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## SaySomething (1 Dec 2016)

I have to say that I'm interested as to how Ulster Bank managed to identify 2,000 (approx) customers all at once. 

The Central Bank guidelines say: 

_The Examination framework provides that when impacted customers are identified; in the first instance, lenders must stop charging the incorrect rate of interest on the customer’s account to ensure that any further customer detriment is stopped as early as possible and communicate this to the customer._​
Full details can be found here: http://www.centralbank.ie/press-are...dateonExaminationofTrackerMortgageissues.aspx

How exactly can they say that they all of a sudden found in the region of 2,000 cases and they will contact them all within the next month or so. That simply couldn't have happened. There seems to have been a deliberate delay in informing customers and moving them onto the correct tracker rates, correct me if I'm wrong here?


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## Sarenco (1 Dec 2016)

That's a very fair point SaySomething.  Mind you, this whole process is shrouded in mystery.


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## SaySomething (1 Dec 2016)

The cynic in me says that the delay allows for any account adjustments to sit into the 2017 accounting year. The next mortgage repayment (after today) won't be due until 1st Jan 2017 for the majority of affected customers. Leaving any accounting issues to fall into 2017...


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## Sarenco (1 Dec 2016)

I doubt that's it - haven't UB already incorporated a faily substantial provision in their accounts to deal with their "legacy issues"?


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## mister32 (1 Dec 2016)

The cynic in me says they are not giving anything away unless they absolutely have to.

But when they announce those being returned to tracker..... Is that it? Or do they have a round 2? And a round 3?


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## SaySomething (1 Dec 2016)

Sarenco said:


> I doubt that's it - haven't UB already incorporated a faily substantial provision in their accounts to deal with their "legacy issues"?



Indeed they have, however Ulster Bank mortgages are issued with annual statements at the beginning of each financial year, for the previous year. That means the 2016 statement will be due in January 2017. The interest due, capital adjustments etc for each account is applied as part of this process. It's a printout from the system. For accounting purposes it would be easier to adjust mortgage accounts on an annual basis where possible, rather than sections of the year. It's less complicated and allows the system printout to go ahead, and gives them a further 12 months to make the new adjustments to the mortgage accounts. 

Any credits/adjustments to the Ulster Bank mortgage accounts will then be visible in the 2017 printout, which will happen in January 2018.


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## Brendan Burgess (1 Dec 2016)

Sarenco said:


> Did Ulster have any fixed rate contracts that provided for a roll-off rate at a "prevailing" tracker rate? If they don't have to deal with this issue then I'm not sure I would be praising UB for criticising their competitors' decisions in this regard - it's a bit of a cheap shot.



Agree fully.  

Ulster Bank did not have "prevailing rate" contracts, so boasting about returning everyone to the rate in their contract cost them nothing. 

If AIB put prevailing rate customers on ECB +1%, then they could have had a shot at ptsb. 

Brendan


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