NatWest’s Ulster Bank Takes Record Fine For Mortgage Scandal

The Irish central bank hit NatWest Group Plc’s Ulster Bank with a record fine and reprimanded it for “serious failings” over its role in a mortgage overcharging scandal that has engulfed the country’s lenders.

Ulster Bank was fined 37.7 million euros ($44.5 million), the central bank said in an emailed statement Thursday. The bank admitted 49 breaches, with some customers suffering “significant overcharging,” it added. The lender’s actions affected 5,940 accounts and as many as 43 customers lost their properties.

The lender has previously paid 128 million euros in redress, compensation and account balance adjustments in relation to the industrywide tracker scandal. These loans were closely tied to the European Central Bank’s key interest rate and were popular in Ireland before the financial crisis hit in 2008.

When bank funding costs soared and then interest rates plunged during the crisis, the loans began to lose money. Many customers were later placed on an incorrect rate.

“I am deeply sorry for the impact that our handling of the tracker mortgage issue has had on our customers and their families,” Ulster Bank Chief Executive Officer Jane Howard said in an emailed statement. “Today’s announcement does not draw all tracker issues to a close and we will continue to work on those cases which are under appeal or are with the Financial Services and Pensions Ombudsman to bring them to a conclusion,” Howard said.

Ulster Bank was aware its mortgage documentation was unclear from 2009 onwards yet failed to bring this to the attention of the regulator and devised a “deliberate strategy” to only correct customers’ rates when they complained, the central bank said. The firm also “failed to meet the Central Bank’s expectations of adequate co-operation” in the investigation.

The central bank ordered lenders that offered tracker mortgages to review their loan books in 2015. The regulator has fined Permanent TSB Group Holdings Plc and KBC Group NV’s Irish unit already, and is investigating all the country’s main retail banks, which have paid out at least 683 million euros in compensation and redress to customers so far.

The fine comes a month after NatWest said it would exit its Ulster Bank business in Ireland.

©2021 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.