AIB fined €83 million over tracker mortgage fraud

AIB fined €83 million over tracker mortgage fraud

AIB fined €83 million over tracker mortgage fraud

A sign hangs outside an AIB bank branch in Dublin, Ireland.Photographer: Aidan

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  • AIB was fined €83,3 million for failing to provide access to low mortgage interest rates.
  • The tracker mortgage scandal damaged the image of Irish banks, which were bailed out during the financial crisis.
  • After AIB’s fine, Ireland’s largest lender, Bank of Ireland, remains to be punished.
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Ireland’s central bank has fined AIB, the country’s second-largest lender, €83,3 million for failing to provide consumers with access to low mortgage interest rates more than a decade ago.

The AIB penalty dwarfs the €38 million. Last year, Ulster Bank was penalized for overcharging for mortgages after tens of thousands of Irish consumers at large banks were denied loans with interest rates that mirrored those of the European Central Bank.

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AIB had reserved €70 million for a penalty.

The tracker mortgage scandal severely damaged the image of Irish banks, which were bailed out during the financial crisis. After ECB interest rates went close to zero at the end of 2011, tracker mortgages proved unprofitable for Irish banks.

As a result, Irish banks converted 40,000 clients to loans with higher interest rates, including loans with fixed or variable rates. In 2015, the central bank initiated an investigation.

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Banks have been penalized a total of €174 million for tracker mortgage failures, the central bank stated in a statement. The lenders have reimbursed and compensated consumers for a total of €737 million.

After AIB’s fine, Ireland’s largest lender, Bank of Ireland, remains to be punished.

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