AIB AIB warns of further tracker scandal costs

This is what they say in their results announcement this morning

We expect to incur exceptional costs in 2019 including costs relating to business restructuring projects and the tracker mortgage examination programme as it reaches its final stages.
 
Interesting.

They have not made any provision for the 6,000 borrowers affected by the prevailing rate issue, other than paying them all €1,615 - so that is €10m.

If we are successful in our campaign, they will have a bill of about €25,000 each on average, so that will hit profits by €150m.

Brendan
 

tnegun

Frequent Poster
They were adamant at the finance committee that they had already made provision for the tracker payouts in their accounts right? So this would indicate they're now thinking otherwise.
 

October2019

Registered User
Or it may indicate that this is the cost for people they agreed to pay out on and not the other 6,000- hope not though!!
 

tonymac

Frequent Poster
Brendan calls it accurately regarding the prevailing rate issue and no provision for a proper resoulution to that issue. Obviously nothing on the EBS and provision for anything there either so according to them we are all dead in the water.
 
Obviously nothing on the EBS and provision for anything there either so according to them we are all dead in the water.
I don't think that this is obvious at all.

They might be preparing to concede on the EBS issue and not the AIB issue. Who knows?
 

tonymac

Frequent Poster
As you say Brendan, maybe they are, hopefully both in due course but the amount of provision as you say wont go near covering the cost of the prevailing rate issue alone. We dont know how many are affected by the EBS issue unless anyone here does so impossible to work out how much that would cost them, a guess would be a lot less than the prevailing rate group.
 

peemac

Frequent Poster
Provision reported in July 2018 report was €262m, a €32m increase from end of 2017 figure, so this attention grabbing €265m headline is in reality a 1.1% provision increase on the June 2018 figure.

Or to put it another way - they gave tracker redress to another 50 or so customers.
 

tnegun

Frequent Poster
Great work as always Brendan getting the mention in. The article seems to indicate that this is the money they had already provisioned for tracker redress and not additional funds though.
 
It's hard to work out what is going on.

They published the annual report on 1 March last. At that stage, they should have made full provisions for anything of which they were aware at that stage. Colin Hunt, in particular, should have made sure that costs were full provided for, so they won't come out of his period of stewardship.

But since the 1 March, something has happened which has changed their estimates of the total cost. And that figure must be material to be noted as an exceptional item.

There are a few possibilities:
1) They are going to concede on the prevailing rate issue - unlikely as they were rock solid at the AGM. But still possible.
2) The Central Bank has indicated what the fine will be. The max fine is €5m and they should have fully provided for this. I don't think it's a material figure either way.
3) The Appeals Panel has gone rogue and is awarding much higher compensation that AIB planned for. Doesn't seem likely, but again it's possible.
4) They are going to concede on the EBS variable rate issue.
5) They just made a mess of the estimation for last year's accounts.

All of these seem unlikely, but it must be something.

Brendan
 

Mehaul

Registered User
It's hard to work out what is going on.

...

There are a few possibilities:
1) They are going to concede on the prevailing rate issue - unlikely as they were rock solid at the AGM. But still possible.
2) The Central Bank has indicated what the fine will be. The max fine is €5m and they should have fully provided for this. I don't think it's a material figure either way.
3) The Appeals Panel has gone rogue and is awarding much higher compensation that AIB planned for. Doesn't seem likely, but again it's possible.
4) They are going to concede on the EBS variable rate issue.
5) They just made a mess of the estimation for last year's accounts.

...

Brendan
It's also quite possible there are other cases still under consideration that they believe will not open the floodgates on the full 6000 that they're now making provision for.

How is the figure of €25k (on average) per claim in the 6000 calculated?
 
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