I have issued a press release on these accounts to the media. Feel free to forward it to any of your contacts.
AIB’s additional provision of €131m for tracker costs is very hard to understand.
This morning AIB published their accounts for the first six months of the year. These include an additional provision of €131m for tracker related issues.
As at the 31 December 2018, AIB had made total provisions of €263m for the costs of the tracker mortgage examination.
They published these results on 1 March 2019. Under accountancy rules, they should have made full provision for all expected costs at that stage even if they had not been paid out.
And now they provide a further €131m.
So what happened between 1 March 2019 and 26th July which gave rise to a further €131m?
For the first time, they have provided for the fine expected from the Central Bank – €43m in total - €35m of which relates to the tracker mortgage examination.
So where does the extra €90m provision come from?
No new cohorts have been identified - The numbers affected have risen only marginally - 246 more to 12,180
So they must be expecting to pay more to those already identified as impacted.
Could it be that they are providing for the Prevailing Rate tracker mortgage customers?
These 6,000 customers were paid €1,650 each for what AIB classified as a service failure. But AIB refused to give these customers trackers arguing that although they should have been offered a tracker, the prevailing rate would have been so high that they did not lose out by AIB’s failure.
Many of these are now appealing this assessment through the Appeals Panel and the Ombudsman.
If these customers win their case, then AIB would have to pay redress and compensation to these customers. With an average redress and compensation of €20,000 each, this would amount to €120m or thereabouts.
AIB must be asked what event occurred since 1 March 2019 when they published their accounts to give rise to this additional provision.