AIB increases its provision for trackers by another €150 to €175m

Brendan Burgess

Brendan Burgess

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From their trading statement today


We expect to incur exceptional costs in 2020 in the range of €150-€175m including costs relating to restitution and operating costs associated with the tracker mortgage examination programme as we work through the enforcement phase. With regard to our decision to apply an award made by the Financial Services Pensions & Ombudsman to c. 5,900 customers, there is no change to the provision taken in 2019.

This does not relate to the Prevailing Rate issue. They provided €300m for that against the 2019 accounts.

This is a new provision for other cases as they realised that what they had provided in previous years was not enough.

Brendan
 
Brendan Burgess said:
From their trading statement today


We expect to incur exceptional costs in 2020 in the range of €150-€175m including costs relating to restitution and operating costs associated with the tracker mortgage examination programme as we work through the enforcement phase. With regard to our decision to apply an award made by the Financial Services Pensions & Ombudsman to c. 5,900 customers, there is no change to the provision taken in 2019.

This does not relate to the Prevailing Rate issue. They provided €300m for that against the 2019 accounts.

This is a new provision for other cases as they realised that what they had provided in previous years was not enough.

Brendan
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€175 million that isn’t related to the AIB prevailing rate? Is that another cohort that has been deemed impacted?
 
I am amazed at how relaxed the brokers seem to be about this. Was it flagged in advance?

The brokers were annoyed at the €300m provision for the prevailing rate issue as they said "
 
It would seem a huge amount of money to miscalculate on previous cohorts. If it were to be another cohort within the AIB Group it would have to be a couple of thousand customers going on previous restitution costs i.e. €300 million to 5900 prevailing customers.
 
Brendan Burgess said:
Hi B

I would say it is unlikely that they have discovered another cohort.

But it is mysterious.

Brendan
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Possibly the two points aren't mutually exclusive, AIB could be happy with the accrual of €300mn as of the end of 2019 and still provide additional costs for the same cohort in the current financial year, which might emerge since they are focused on July/August as releasing the letters/refunds etc. That would allow AIB a little wriggle room in their financial results to the half year. Maybe this relates to cases they could be willing to settle on the steps either, or the genuine hard luck cases already in front of the FSPO that are on hold.

They certainly aren't fans of releasing too much information around the issue one way or the other.
 
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Maybe AIB are seeing sense and are going to put the 5900 cohort onto tracker rate and include them in the redress and compensation scheme to try and put this tracker saga behind them once and for all........that would be the smart thing to do!!!
 
Megafan said:
Possibly the two points aren't mutually exclusive, AIB could be happy with the accrual of €300mn as of the end of 2020 and still provide additional costs for the same cohort in the current financial year, which might emerge since they are focused on July/August as releasing the letters/refunds etc. That would allow AIB a little wriggle room in their financial results to the half year. Maybe this relates to cases they could be willing to settle on the steps either, or the genuine hard luck cases already in front of the FSPO that are on hold.

They certainly aren't fans of releasing too much information around the issue one way or the other.
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My reading of the statement is that this money is not related to the prevailing cohort at all. My opinion is that it is more likely related to implications of recent FSPO decision/s we haven’t heard about yet.
 
The analysts were expecting it.

Goodbodys


It flags likely exceptional charges this year of €150-175m
(we had €165m, so in line).


Davys


Lower transaction activity and customer initiatives will negatively impact fees and commissions and exceptional costs are guided at €150-175m (Davy: €140m).
 
B26354 said:
My reading of the statement is that this money is not related to the prevailing cohort at all. My opinion is that it is more likely related to implications of recent FSPO decision/s we haven’t heard about yet.
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Hi B26354, not getting my hopes up too much but maybe it is another cohort within the AIB group. €175 million is a lot of money but €300 million is meant to cover 5,900 people, how many would be covered by €175 million i wonder.
 
tonymac said:
Hi B26354, not getting my hopes up too much but maybe it is another cohort within the AIB group. €175 million is a lot of money but €300 million is meant to cover 5,900 people, how many would be covered by €175 million i wonder.
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Roughly 2500-3000 customers based on previous figures from AIB.
 
I just found this in a news article "AIB said it saw modest cost growth in the three months to the end of March and expected to incur exceptional costs in 2020 of 150 to 175 million euros related to a probe into an overcharging of customers a number of years ago." Maybe related to expenses and fines?
 
Folks

Please do not use this thread as another place to discuss your particular cohort. Discuss your cohort in your own threads.

In particular, I have had to delete a lot of "AIB staff " posts which were being posted in lots of other threads. It's very annoying for everyone else when you take threads off topic.

Brendan
 
From the Irish times website, Mr Hunt said that Voluntary Severance was included in the €150 - €175 million exceptional provision.
 
Is it odd that Hunt has lumped severance pay in with tracker redress payments? They had budgeted to pay between €100-150 mill on severance pay but that figure was up to 2022 which still doesn’t account for this expected €150-175 in this year alone.

www.thetimes.co.uk

AIB paid €900,000 severance to senior executives

Five senior executives who left AIB last year shared €900,000 in severance payments with one of them receiving €225,000 for leaving the bank. Another top executive recruited in 2019 was paid €100,000 in compensation for lost earnings from a previous job. The disclosures come as the state-controlled
www.thetimes.co.uk www.thetimes.co.uk
 
Speaking to a bank official yesterday and she seemed to think included in this extra provision are refunds related to historical overcharging of interest on top up loans. I mentioned that had been refunded already a few years ago and she seemed to think it was a similar but different issue, this was another service failure that occured. Yes she used that terminology!
 
Apparently I may be considered in this grouping for the tracker mortgage. I had a mortgage with AIB, I was on a standard Variable Rate of 3.65% in 2015 with a balance of €258k. Can someone advise what may this mean for me I am not really clear on this.
 
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