# Bank of Ireland before Oireachtas Finance Committee this morning 9.30 am



## Brendan Burgess (21 Sep 2017)

You can watch it live here: 

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

They will be in private session at the start. That could last 5 minutes or an hour. 

Brendan


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## justo (21 Sep 2017)

Aisling ellis said:


> Thanks for this, any idea when ulsterbank are due before oireachtas next?



Ulster Bank: October 5th


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## SaySomething (21 Sep 2017)

The meeting is in private session. So if you have a holding screen it will stay like this until the private discussion completes.
Normally the guest of the Committee will make a prepared statement to them at the start of their hearing, then answer questions. I'll post back when the hearing has opened to the public.


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## Brendan Burgess (21 Sep 2017)

BoI is starting now

Liam McLoughlin  Chief Executive of Retail Ireland
Stephen Mason - Head of Operations Retail Ireland
Pat Farrell Head of Communications


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## Brendan Burgess (21 Sep 2017)

9/10  customers up to date
9/10 who requested forbearance got it
9/10  borrowers who got forbearance are keeping to the terms 

1.4% of customers are over 2 years in arrears, compared to an industry average of 5.2%


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## Brendan Burgess (21 Sep 2017)

Pearse Doherty

Variable interest rates
What are your rates above 80%  and what are AIBs?
>80% for BoI are 4.5% - I don't know AIB's rates.

Doherty: You don't AIB's rates? Are you serious?

You are the outlier?

McLoughlin: I don't believe so.

Which are dearer?

Doherty
Can you explain to someone whom youare charging 4.5% how much the funds cost you?

McLoughlin

Cost of funds 50 basis points
We have seen a reduction of 25 basis point, which we have passed on to fixed rate borrowers
Cost of operations:   I don't have that.
Cost of capital: The cost in Ireland is 31% , in the UK it's 20% , In Scandinavia it's single figure
Cost of credit: Is also higher

Doherty: What is the blended cost of everything

How can you justify charging twice the European average?

*Arrears *
2283 in legal process
4,000 have gone - where are they?
(Seems to be the halving in the numbers of arrears)

Mason:
> 2 years, 44% reduction since peak in 2014.

Doherty: legal process
How many vacant properties are on your books

Mason: A very low number.  80 or 90. Half are on the market, half are getting ready for market.   We have sold more properties than we have taken in.

*Doherty *
319 eligible cases for Mortgage to Rent(?)

Mason: We are big supporters
We have done 59 cases . The other banks combined have done 46

111 cases where the customer decided not to proceed

80  cases the Approved Housing Body would not approve the application

69 working their way through the system

Doherty: Do you expect the numbers to increase

Mason: the parameters have changed
people in positive equity and with spare rooms can now apply.

*Doherty: Are you lending to developers who are building residential properties 
*
Yes.


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## SaySomething (21 Sep 2017)

602 Customers identified.
It is not complete.
It is an ongoing review. 
There are 3,500-3,900 customers with margin error. Which means they were on tracker rates but they were on the wrong margin.
We have contacted all these customers and put them back on the right rate.
We will be engaging with those over the coming months with redress and compensation.
The focus recently has been more about the customer issue and putting them back on the tracker rate.
Phase 2 was due to be complete by 30th September 2017 and we submitted our report on time.
The number may change.
Redress and compensation, we expect redress and remediation should kick off in the next few weeks but it certainly should be before Christmas.


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## Brendan Burgess (21 Sep 2017)

*Michael McGrath 
*
Can we have an update on the tracker mortgage review

McLoughlin:
602 customers who were entitled who were not on a tracker mortgage
But it's not complete
3500 -3900 with margin errors of up to 15 bps

We have put all customers back on the right rate.

We will be contacting them over the coming months with compensation

Our focus has been on getting them back on the right rate.

McGrath: The number may change? Yes.
When do you expect to pay compensation:
McLoughlin: Hopefully before Christmas
McGrath: What is the model?


McLoughlin
We did a huge review in 2010 - around 5,100 customers were addressed. (2100 were given trackers back, 3,000 who came off fixed rates were put on trackers)

How much:

McLoughlin: We have provided for €25 m.

[BB: an average of €42k per customer]

McGrath : what about the staff
McLoughlin: Still in discussion with the Regulator. No decision made.

*Mortgage Rates 
*
Cost of funds 41 basis points

Do we have figures for the other costs .

McLoughlin: Not for the mortgage book in particular

McGRath: Then how do you do your pricing of mortgages?  [Great question]

McLoughlin: It's not in the public domain

McGrath; 27% are on SVR  [ I think that is for the LTVs as well]

What can a customer of >80% LTV do?  Can they fix?

If they are in Negative EQuity

McLoughlin:  Yes they can

McGRath - so they can fix on 3.3% for two years?
McLouglin : Yes.

McGrath: Why don't you just compete on rates and get rid of the cash back gimmicks?

McLoughlin: Our customers, especially FTBs like them.
It brings down the initial costs - legal costs
People think that they are tied in on the fixed rate
Customers can overpay by 10%  month
They can port the mortgage to a new home
We have built in flexible options into our

Some have split their mortgages in variable, 3 years fixed, and 5 years fixed.

McGrath: Why don't you have 50% LTV rates for fixed rates.  At the moment, it's only > or < 80%.

McLoughlin: For simplicity

McGrath: If someone reduces their LTV band, can they move to the lower band

McLoughlin: Yes, if they submit an up to date valuation.

McGrath: I would like to acknowledge the Workbench initiative and the Enterprise Weeks


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## SaySomething (21 Sep 2017)

Back in 2010 there was 5,100 customers redressed.
The provisional number that we have put in the public domain is €25 million which relates to the current evaluation in terms of the cost  to the bank.
Michael McGrath emphasises the importance of repaying affected customers.
Deputy McGrath queries the staff tracker issue.
No decision is still under review with the regulator and no decision has been made on those.


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## Brendan Burgess (21 Sep 2017)

Kieran O'Donnell

I would also like to acknowledge the Workbench initiative and the Enterprise Weeks

How much funding have you provided to residential property developers

McLoughlin: We have a fund of about €1b - doubled in the last 6 months. It's not always out in loans, but we would like it to be.

O'Donnell: 3% cash back
Existing customers are subsidising new customers

McLoughlin: No  - Our fixed rate is 3% and is available to existing customers as well.

O'Donnell: It that 3% were not there, you could reduce rates for existing customers

It has an element of Hello Money about it.


McLoughlin: No. We introduced it because we were barred from the Troika from using brokers. So we are giving it to customers instead.

O'Donnell: Will BoI reduce rates in line with AIB?

McLoughlin: We made our move in June.

O'Donnell: I would ask you to reduce the variable rate in line with the market

What write offs have you given? 

Mason: We don't do write offs.


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## PadKiss (21 Sep 2017)

Is this a joke Liam McLoughlin states  there is a preference for fixed rates 
Of course there is if you are charging 4.5% variable 
I lost count on the amount of times fair value was used today in the presentation 
The spin on the tracker investigation is worth noting 
Phase 2 is concluded with boi 
that means boi do not believe staff are impacted but are waiting on what will come from phase 3 

They have all the stats of the other banks but don't know their interest rates 
Frustrating to say the least


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## LadyHB (21 Sep 2017)

Have they confirmed that all impacted tracker customers (excluding staff) have been contacted and put on the correct rate?


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## skinnylegs (21 Sep 2017)

BOI has identified ZERO new impacted customers since 2010 under this review. 
Am I wrong on this? All cases now sent to Deloitte for "confirmation" of this. And from there to Central Bank. 
Roll on 2035 when this is all settled.


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## Brendan Burgess (21 Sep 2017)

Brendan Burgess said:


> McLoughlin:
> 602 customers who were entitled who were not on a tracker mortgage
> But it's not complete
> 3500 -3900 with margin errors of up to 15 bps
> ...





Brendan Burgess said:


> McGrath : what about the staff
> McLoughlin: Still in discussion with the Regulator. No decision made.



As I understand it. 

BoI have identified all the customers whom they consider have been affected by this. That is a total of  602 and they have put them on the right rate. 

They don't believe that there are any more affected customers. 

But based on Michael McGrath's questions, there are other people who believe that they were affected and the Central Bank has not approved of the Central Bank approach.

I would guess, and I have no special insight, that the Central Bank is challenging their approach to the staff tracker issue, and that BoI is robustly defending its position. 

Not sure what happens if they don't reach an agreement. 

Brendan


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## SaySomething (21 Sep 2017)

That's pretty much my reading of it.
Bank of Ireland stated that they had submitted their Phase 2 report in advance of the 30th September deadline.
When queried about the staff mortgages they alluded to the fact that they are still under review. 
If the Phase 2 report is handed over, then they're waiting on the Central Bank to decide on the staff cohort based on the Phase 2 report.
Whenever the Central Bank sits before the Committee I believe it's important to ask them when their review of the Phase 2 reports will be completed for all Banks.


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## skinnylegs (21 Sep 2017)

He who pays the piper.......


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## nonie (21 Sep 2017)

Phase 2 completed. Did they confirm whether they have contacted all the affected customers? I have not been contacted. I am most certainly affected as confirmed by the fso finding in my case in 2013, yet not a single update from BoI.


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## justo (21 Sep 2017)

Chairman threatens 'far rougher' treatment for banks in front of the Committee. 'They need to put their hands up and write the cheques'. 

... Welcome words but a hollow enough threat at the same time...


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## justo (21 Sep 2017)

Accuses the banks of 'dodging the bullet' in both the questionnaires and in person...


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## justo (21 Sep 2017)

He encourages BOI to meet P Kissane, but again, is quite soft in his instruction to do this...


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## moneymakeover (21 Sep 2017)

I also am affected

But still not received a yea or nay from BOI

Received no information from BOI in about 18 months

How can they suggest all done and dusted to the Oireachtas?


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## notabene (21 Sep 2017)

@SaySomething  is UB's meeting a private meeting? in the morning? do you know?


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## Onceagain (21 Sep 2017)

The Central Bank needs to grow a pair.


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## SaySomething (21 Sep 2017)

@notabene I've not had the time confirmed. It's not private and I've organised a seat for myself in the gallery. Probably in the morning though.


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## todo (21 Sep 2017)

So whats the next step for those who feel they are effected?

Wait for phase 3 to end in Sept 2020?


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## moneymakeover (21 Sep 2017)

there are couple of cohorts affected but not yet recognised: those who fixed,  BOI staff
Maybe for Padraic to organise a meeting
I get the impression it will fall to the regulator / central bank to make the call

Separately Irish Times

https://www.irishtimes.com/business...-rate-redress-payments-within-weeks-1.3228980


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## SaySomething (21 Sep 2017)

There is very little you can do if you think you are affected but haven't heard and/or you have been affected and haven't been redressed yet.
As @notabene has mentioned in relation to another bank...
Basically the FSO will not adjudicate a complaint against a bank relating to their handling of the examination and suggests that complaints should be directed to the Central Bank.
The Central Bank says 'the Central Bank of Ireland cannot intervene in any individual cases and cannot investigate individual consumer complaints.' - quoting directly from correspondence with me recently.
BOI says that they have handed their Phase II report over to the Central Bank and cannot comment on any further cases pending the Central Bank review of their Phase II progress.
Yes, it is incredibly frustrating. You're right it is ridiculously unfair.


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## Linten (23 Sep 2017)

It looks fairly clearcut based on L McLaughlin presentation that the Bank have concluded Phase 2. This means that if you have not by now been restored to your Tracker, you are deemed not to be impacted by the Examination. It also appears though that the CB have not signed off on the submission yet, so they may ask the Bank to look again at some elements of the process.
@moneymakeover how do you see your situation. You will not hear from the Bank unless you are impacted. If you were on TRacker at any time you were in scope for the Review but as I say if you haven't been restored at this stage they are saying you are not going to be.


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## moneymakeover (23 Sep 2017)

I agree with what you're saying

I was on the review by BOI

I got a letter from castleisland about a year ago

Nothing since

I remain hopeful

I have spoken to Padraic Kissane and there is still hope

Not surprising the bank decided the way they did. Why wouldn't they.

It requires some kind of intervention by the central bank/regulator.

According to the 2006 consumer protection legislation I clearly have a case.

Based on what the governor said last time he was in the Oireachtas me and my type of case will be returned to tracker.



> lenders must review the underlying loan documentation and customer files for the in-scope accounts to determine their specific contractual obligations, and also to determine if the documentation that each customer received had the potential to confuse or mislead the customer, both on a stand-alone basis and when read in conjunction with other communications – be they written or verbal – made to the individual customer.



Just nothing has happened since. And that was April.

He is due to appear again in October.

We live in hope.


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