Why did Ulster Bank not include mortgages that tracked the Euribor/ BCOF in its Tracker Mortgage Examination?


I see your viewpoint on this Scrooge, however when I look at the CBI’s definition of a tracker interest rate within the framework for conducting a tracker mortgage examination again, it states

“For the purposes of the Examination, a “Tracker Interest Rate” refers to the interest rate applied to a mortgage product: 1) which tracks a rate which comes from a publicly available source which can be verified by both the customer and the regulated entity, including without limitation, a rate that tracks the European Central Bank (ECB) main refinancing operations rate; and 2) which is calculated in a manner similar to a rate which falls within 1) above, and includes interest rates calculated on the basis of a fixed rate margin and/or pricing promise.
2 Both enduring and one-off contractual rights and options are to be included within the scope of the Examination”.

The interest rate applied to my loan tracks a rate which comes from a publicly available source, namely the one month euribor, point 1) in the UB’s definition of BCOF refers. The CBI’s definition of a tracker interest rate for the purposes of the tracker mortgage examination is very broad and specifically does not say solely tracks such a rate. This is why I believe such UB BCOF mortgages should have been included in the tracker mortgage examination.

Another very important point that I would like to make is that if my loan is sold on, to say Promontoria or another fund, such funds do not have any regulatory, special reserve and/or special deposit or liquidity or funding requirements like mainstream banks do. So then, if my facility was sold to such a fund, without doubt, the BCOF mortgage facility becomes a tracker mortgage, even by your definition of what a tracker mortgage is. Is that not the case?
 
FYI

Regarding an Ulster Bank Cost of Funds Rate mortgage (BCOF). if your loan is sold on Promontoria, this fund does not have any regulatory, special reserve and/or special deposit or liquidity or funding requirements like mainstream banks do. Therefore, Ulster Bank’s BCOF mortgages become tracker mortgages! (as per Ulster Bank’s definition of what a BCOF mortgage is (see earlier post)). I have also heard from reliable sources, that once this type of mortgage is moved to Promontoria the rate remains the same (fixed) eventhough Promontoria do not offer fixed rate options for borrowers.

This is very interesting as the one month euribor rate was in negative territory until recently. I will do some research on same and if this is the case above, I will start another thread on this matter.
 
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Hi All,

Long time reader of AAM, first time writer today.

Having read this thread today in 2023 and having read the thread in 2018 on the exact same issue, i felt compelled to share my experience regarding Ulster Banks rather egregious application of interest rate indexes to a commercial loan i once had with them.

April 2006 Loan Offer on a 3 Month Euribor +1.80 margin , with the margin dropping to +1.25 Margin over the Euribor on completion of drawdown and having tenancy agreements in place. I signed a three page loan offer document where you sign at the end of page 3. On page two under the interest rate description paragraph the document reads Please also refer to Appendix 1. (i dont remember at the time there being an Appendix 1). Some years later i got a copy of the appendix. In the Appendix the document states with effect from 20th May 2006, the Loan currently price off the Banks Prime Rate will be replaced by the Banks Cost of Funds.

April 2008 UB sent out a 'Renewal' of the Loan facility, whereby the interest rate product now delineated UB's Cost of Funds as the interest rate applicable to the Loan facility. I never applied or requested this 'Renewal'. The 'Renewal' supersedes all prior Loan agreements. Even if i didn't sign the document the wording in the document stated after 30 days this facility would come into affect by continuing to use the the facility.

Unlike the cohort the OP described, my Loan Offer was never on the Banks Prime rate.

2018 i received a letter from Ulster Banks GRG unit (Global Restructuring Group) stating i had been overcharged interest on the banks Cost of Funds index rate for a duration of about 8-9 years. This is where i discovered the unilateral switch from the Euribor to UB's Cost of Funds interest rate. When i questioned why the Euribor margin never dropped from +1.80 to +1.25 on completion of drawdown the Bank stated that the interest was 'Rolled Up' from 2006 to full drawdown in late 2007.

I then asked why the Loan was taken off the Euribor interest rate. The Bank stated i did so myself in 2008 by signing the 'Renewal' facility. I asked the Bank to provide the Bank Statements to show what interest was charged and at what interest between 2006 - 2008 was charged. The Banks response was they were are unable to provide the statements, and sometime later stating they had lost the statements. Alarm bells went off at this stage as they could tell me the Interest was allegedly Rolled Up but nothing else. My suspicions are the Loan was moved to the Banks Cost of Funds on 20th May 2006 like many others, before i signed the 'Renewal' facility in 2008.

In 2020 i received a conditional offer from UB for the Overcharged Cost of Funds interest for X amount plus simple interest, providing i declare a full and final settlement with UB absolving them of any past or present liability.

Currently have a case with the FSPO regarding these issues. The FSPO seem unwilling to investigate the 2006 Euribor switch to the banks Cost of Funds due to the statue of limitations on these types of cases, but that remains to seen what the outcome will be.

Anyways, said i would information share what i have managed to established to date.
 
Ace Rothstein,

I have received a number of emails and phone calls from people in the same position as yourself. One individual that I dealt with lost a 5 million euro residential/ commercial complex. He had a euriibor rate plus margin mortgage with Ulster Bank. When we had a forensic accountant examine his loan account it emerged that Ulster Bank were charging the individual the overdraft current account interest rate to his mortgage account, instead of the mortgage interest rate. When this issue was evidenced to Ulster Bank the bank gave the borrower 580,000 euro approx in total compensation and restored the customer to a more advantageous interest rate. The original margin above the one month euribor rate reducing by 0.5%. I will be starting a new thread regarding this very serious issue in the next few days. I hope you will move your post to the new thread.
 
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And he never noticed this and needed a forensic accountant to spot it? Didn't he ever look at his account/statements at all? Sounds almost unbelievable...
 
ClubMan said:
And he never noticed this and needed a forensic accountant to spot it? Didn't he ever look at his account/statements at all? Sounds almost unbelievable...
Click to expand...
IANAL Clubman, Ulster Bank argued with the client that they were contractually entitled to charge the overdraft rate as it was in the terms and conditions of his current account contract. Like the poster Ace above, we put in a complaint to GRG. GRG after reviewing the case, stated that what the Bank had done was unequitable and non transparent in its pricing application to the clients account, it rejected the contention that this conduct was done purposefully to cause default. They initially offered our client 390,000 euro approx. This was appealed to their appeals board and after much correspondence exchange regarding the consequential loss our client suffered (were we employed a senior counsel (shock horror)) the figure of 580,000 approx was set by GRG and agreed upon by the parties.
 
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