Ulster Bank: No decision yet on 7,000 loans

By Pádraig Hoare

The boss of Ulster Bank has defended his decision not to attend an Oireachtas finance committee hearing on the tracker mortgage scandal earlier this month.

Gerry Mallon, who is leaving to head up Tesco Bank in the UK, said he felt it was the “right decision” at the time as other Ulster Bank officials could provide the required information in a more comprehensive manner.

His decision drew fierce criticism from TDs and senators, who accused him of disrespecting the Oireachtas and customers affected by the tracker scandal.

Ulster Bank boss Gerry Mallon has said no decision has been made on the sale of 7,000 mortgages in arrears to a foreign fund.

Speaking on the back of the bank’s annual results, Mr Mallon said Ulster Bank was “not firing the starting gun on any kind of portfolio sale at the minute”, after speculation that a vulture fund could take over 7,000 of its 20,000 mortgages in arrears — a book worth €4bn.

“We have a level of non-performing loans of about 16% of our total loanbook. The direction from the ECB is that the banks should probably be closer to 5%.

“We’ve got a requirement to get down to that, so there will be a range of strategies deployed reducing that overall level of non-performing loans, the best of which is to get customers on track to repay their borrowings and to have them restructured in a sustainable way.”

He said in 25% of cases, “customers in arrears are not even engaging”.

“Up to a quarter of the total in this arrears category are not engaging with the bank at all. They really need to do that because it is impossible to find any kind of sustainable solution for them if they are refusing to even engage,” he said.

The costs of Ulster Bank’s role in the tracker mortgage scandal was a factor in it recording an operating loss of €151m last year, compared to a €24m profit in 2016.

Mr Mallon, who is soon leaving to take over the reins of Tesco Bank in the UK, said it would soon be in a position to confirm how many more customers were affected by the tracker scandal.

Ulster Bank has around 3,500 identified cases as needing redress and compensation for wrongly being put on more expensive loans.

An additional €87m has been set aside for redress and compensation, in addition to the already earmarked €211m.

Mr Mallon said the tracker scandal and the adverse publicity had not been a factor in his decision to leave the bank.

“I was offered a very attractive new role. It wasn’t an opportunity I went seeking. It was a very difficult decision to leave, if that opportunity had not presented itself to me, I would have been more than happy to continue on, and be proud to lead what is a fantastic team at Ulster Bank,” he said.

Mr Mallon said he had no regrets about not appearing before the Oireachtas Finance Committee last month to update TDs and senators on the tracker progress, instead sending Ulster Bank officials to face questions.

His decision to not appear led to ferocious criticism from members of the committee, who accused him of disrespecting the Oireachtas and the people affected by the scandal.

“On the subject of tracker mortgages, I have colleagues who provided that evidence comprehensively and much more thoroughly than I could have. In every case, we need to decide what is the appropriate representation for the bank.

“Given the fact that I had just announced I was departing, we felt it would be more appropriate for others to appear rather than myself,” Mr Mallon said.

Meanwhile, Ulster Bank’s owner Royal Bank of Scotland Group (RBS) reported its first annual profit in a decade. A case being taken by the US Department of Justice against RBS remains on investors’ minds, analysts said.

Shares were down more than 4% though the bank exceeded expectations by turning an €854m profit.

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