Ireland’s central bank has fined AIB, the country’s second-biggest lender, €83.3mn over its failure to give customers access to cheap mortgage interest rates in a scandal stretching back more than a decade.
The penalty for AIB dwarfed the €38mn Ulster Bank was fined last year for overcharging for mortgages after tens of thousands of Irish customers at major banks were denied loans whose rates tracked those of the European Central Bank.
AIB had set aside €70mn for a fine.
The tracker mortgage scandal further dented the reputation of Irish banks, which had to be bailed out during the financial crisis. Tracker mortgages became unprofitable for Irish banks after the ECB’s interest rates fell close to zero at the end of 2011.
As a result, Irish banks switched 40,000 customers to more expensive interest rates, including fixed or variable rate loans. The central bank began an investigation in 2015.
The AIB sanction brings to €174mn the amount banks have been fined over tracker mortgage failings, the central bank said in a statement. The lenders have themselves paid €737mn to customers in redress and compensation.
After AIB’s sanction, Ireland’s biggest lender, Bank of Ireland, is still to receive a penalty.
Source: Economy - ft.com
