Matters Relating to the Banking Sector (Resumed): Ulster Bank

We will now resume discussion of matters relating to the banking sector. From Ulster Bank, I welcome Ms Jane Howard, chief executive, Mr. Paul Stanley and Mr. Ciaran Coyle. It is Ms Howard's first appearance before the committee. She is very welcome and I wish her well.

I advise the witnesses that by virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the committee. However, if they are directed by the committee to cease giving evidence on a particular matter and they continue to so do, they are entitled thereafter only to a qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the House or an official either by name or in such a way as to make him or her identifiable.

I invite Ms Howard to make her opening statement.

Ms Jane Howard

I thank the committee for the invitation to appear before it. As this is my first appearance before the committee, I feel it is respectful to members to take a few moments to introduce myself. Last September, I moved to Ireland from Manchester and I am privileged to have taken up the role as CEO of Ulster Bank. I have worked in financial services for almost 39 years in a variety of roles, including in retail, corporate, operations and risk management. In my previous post, at the Royal Bank of Scotland, RBS, I was managing director of NatWest and RBS personal banking, where I was responsible for leading the team for the day-to-day banking needs of approximately 15 million customers throughout the UK.

I am joined by my colleagues, Mr. Paul Stanley, chief financial officer and deputy CEO, and Mr. Ciaran Coyle, managing director of personal banking. In the invitation letter, the committee expressed an interest in Brexit preparedness and the accountability framework for the banking sector, which I will cover in my opening statement.

I begin by providing some insights into the progress we are making in Ulster Bank. Our strategy is to continue to leverage our parent and to build a stronger, safe and sustainable bank, offering high-tech and high-touch solutions to provide effortless everyday banking services that our customers value, and to be there for them for what matters to them. We believe that a blend of digital and physical banking is the winning combination because our customers tell us that is what they want and value. To support our strategy, we continue to focus on innovation. We have expanded our partnership with Dogpatch Labs, a leading co-working space for technology start-ups. Some of our colleagues are developing their entrepreneurial talent and creativity to deliver innovative solutions for our customers. We recently co-hosted a fifth annual Hackathon, a weekend which brought together members of the community, including the tech community, to design innovative banking solutions for customers.

Underpinning, and fundamental to, our strategy is the continuation of transforming our culture to one where customers are consistently at the heart of everything we do, served and supported by professional colleagues.

Since Ulster Bank’s previous appearance before the committee, we have made tangible progress on our priorities. In respect of lending to support our customers and the economy, a core part of our strategy is to help our personal customers to buy a home and to save money by switching to lower rates. This aligns with our investment to improve the service and offer market-leading fixed rates. Last year, we saw a 13% increase in new mortgage lending to €1.13 billion. That momentum has continued into this year. We also lent approximately €1.4 billion to our business customers and, with a good start to 2019, we expect that figure to grow this year. Our Lombard asset finance business saw volumes increase by more than 40%, or almost €200 million of new lending. We were conscious that 2018 was a particularly challenging year for the agrifood sector and introduced a weather fund to support customers in a year of unprecedented weather events. We expanded our relationship with the Strategic Banking Corporation of Ireland through its Brexit loan scheme and joined the BGF backers for businesses. We also intend to participate in the new future growth loan scheme.

We continue to see more customers change the way they bank. Today, seven out of ten active personal current account customers choose to bank using digital channels and in the first quarter of this year, we have seen a 31% increase in mobile payments and transfers compared with quarter 1 2018. We are listening to what our customers want from us and innovating to make our customer experience effortlessly everyday and brilliant when it matters.

In the past year, we have introduced new applications and services such as: ClearSpend, which gives businesses better control of their expenses; Manage my Mortgage for our residential mortgage customers, enabling them to make changes to their mortgage online and from the comfort of their home; and Cora, our new artificial intelligence-driven digital banking assistant to help answer customer queries 24-7 every day of the year. We have also been adding more features such as FaceID and paperless processes for our everyday banking products, making the digital experience simpler and more secure for customers.

As I mentioned, our strategy is both high-tech and high-touch. We have invested in our physical presence, expanded our mortgage broker panel and increased the number of mobile mortgage managers across the country, offering flexible meeting times and locations, chosen by our customers. We have five mobile banks, a community protection adviser and our team of community bankers. We are continuously improving our branch network and 41 branches have seen investment. We plan more this year. New needs arise for our customers and last year we launched Friends Against Scams. We are committed to playing our part in the fight against fraud so we trained colleagues across the bank. We are educating customers on how to protect themselves against the horrific practices of scams which, when they happen, can impact consumers and our customers so badly.

Since our previous appearance before the committee, we have made progress on reducing our non-performing loans, NPLs, which stand at just over 10% of the total, but there is more to do. Our regulators have set out capital requirements for NPLs and those requirements mean that over the coming years we will need to increase the capital we hold up to a point where we will have to hold enough capital for the full amount of the non-performing loan. That capital is then tied up and we cannot use it to support loan growth which would contribute to the Irish economy. To be clear, our priority is to work with our customers to put in place long-term sustainable arrangements so that as many customers as possible can remain in their home and paying off their mortgage. We have invested in additional resources to ensure that every customer has every opportunity to engage with us to enter into a long-term solution. We have found that when customers have worked with us, a solution can be found for four out of five, meaning they can remain in their homes.

We have also made significant progress on our customer remediation programmes to put right our wrongs of the past and learn from our mistakes. We completed a thorough process to identify all impacted tracker mortgage customers and we do not anticipate any new or additional impacted upon groups of tracker customers to emerge at this point. We have made redress and compensation payments to all tracker mortgage examination customers for whom we have contact details. The thorough review identified other issues relating to errors on the accounts of business and mortgage customers that we will have resolved by the middle of this year and end of this year respectively. Let me take the opportunity now, as this is my first time in front of the committee, to sincerely apologise for our past mistakes and the impact they had on our customers.

Turning to Brexit, the subject is top of mind for many customers, although many of our business customers tell us also that shortages of both skilled and unskilled labour is a bigger issue. Supporting our customers is a top priority and we continue to do this, first, by communicating what we can do to support them to understand the impacts of Brexit and, second, drawing to their attention all the Government and agency supports available, which are excellent. We see different types of businesses that can adapt and which are adapting. Many are well-prepared and have sound contingency plans. There are particular challenges for some customers who export to the UK or who use the UK as a land bridge to the European market. Where additional resources and guarantees are required in respect of customs and tariffs, for example, we are ready to support our customers.

We continue to monitor the impact of the UK decision to leave the European Union on the bank and our customers and have been preparing for a number of scenarios, including a no-deal position, as part of our contingency planning as a stand-alone bank and as part of RBS. There has been no material impact noted to date; however we are conscious of the potential for future impacts on the bank, our customers and our operations. A bank-wide Brexit response programme has been mobilised to assess those impacts and to develop contingencies under a number of Brexit scenarios to ensure that we can continue to serve our customers well. Regardless of the outcome of the Brexit negotiations, our aim is to support customers with the same level of service and range of products as we do today and to help them address any related challenges.

The committee also asked me to address the topic of the accountability framework. I welcome the introduction of the senior executive accountability regime and I know from my experience in the UK how such a regime can make a difference to promoting stronger accountability, ethics and culture in financial services. Increased accountability will be better for our customers and for society as a whole and while a senior executive accountability regime alone will not transform culture within the banking industry, it will help.

I will finish on the topic of culture. Much has been said about banking culture at this committee and at other fora in recent times. We in Ulster Bank have learned many lessons. We got things wrong and we are fixing mistakes from the past and learning from them. We are absolutely committed to rebuilding trust with our customers and Irish society. We recognise we have much to do and we are changing. We are making different decisions today from those we may have made in the past.

In Ulster Bank we have defined our culture as "the way we do things" and it is consistently living our values to act in the best interests of our customers, colleagues and stakeholders. Our four core values – serving customers, working together, doing the right thing and thinking for the long term – guide our priorities, activities and decision making. We have strengthened our risk and control environment to reduce the possibility of errors occurring. We are building a customer-focused culture where colleagues are encouraged to help customers be financially fitter and to speak up if and when see things that might look wrong or if they have any concerns. Tone from the top is something I and my leadership team are conscious of every day. This is one of the reasons I have personally committed to completing the Institute of Bankers professional diploma in leading cultural change and ethical behaviours in financial services and sitting on the Irish Banking Culture Board.

I am pleased to report we have made progress over the past 12 months across our customer, operational and financial metrics, along with the continued execution of our strategy to transform Ulster Bank. We are happy to take any questions.

I welcome Ms Howard on what is her first appearance before the committee as chief executive. I wish her well and every success, although I know she is well settled into her role at this stage. I welcome her colleagues, Mr. Paul Stanley and Mr. Ciarán Coyle, and I thank the witnesses for the comprehensive responses to the questionnaire we received in advance of the meeting. I also thank Ms Howard for her opening statement.

I will start with the matter of NPLs and the work that must be done to reduce non-performing loan ratios. The opening statement indicates the current NPLs level is just over 10% and it is acknowledged in the replies in section 4 of the questionnaire that the regulators expect banks to reduce the level of NPLs towards the European average and have set out capital requirements that must be adhered to in respect of those loans. Will Ms Howard outline her understanding as chief executive of where it must go in terms of the NPLs ratio, when it needs to do this and how it intends to get there?

Ms Jane Howard

There is not a specific target set by the European Central Bank but it is clear that any bank with NPLs in excess of a 5% level is regarded as having a high number of NPLs. The banks are expected to have a plan to reduce those towards the European average. We have seen that European average reduce more recently to between 3% and 3.4%. That is sound risk management for any bank. Although we do not have a specific target, we absolutely understand our commitment to reduce our level of NPLs.

As the Deputy notes, we have made progress. The last time representatives of the bank were before the committee, the level was approximately 17% and it is currently 10.3%. It is important that I highlight our first priority, which is to help customers with a non-performing loan - a mortgage - to get into a long-term and sustainable solution.

Accordingly, we have always contacted customers who are in arrears.

We have also committed additional resources to ensure that we can contact all of our customers who are in a non-performing status so that they can engage with us and we can help as many of them as possible. We have employed additional resources because the economy is stronger, unemployment is at a lower rate of just under 5%, many of our customers who are in a non-performing status have higher available incomes and house prices have increased significantly. Against that background, we have found that when customers fully engage with us, which includes completing a standard financial statement, we can offer a long-term solution to four out of five customers that keeps them in their homes. Sadly, we cannot find a long-term solution for one in five customers who engage with us that keeps them in their homes. It is almost an impossible situation. In such circumstances, we work with the customers on an individual basis and examine other options. These might include mortgage-to-rent or a voluntary surrender.

Our priority is to help customers, but we need to reduce our number of NPLs. While there is no target, there is an expectation that we reduce them. We believe that is right.

The bank's current rate in respect of NPLs is 10.3%. We have heard from a number of other banks that they have attached particular significance to the end of this year. Has that been communicated to Ulster Bank? Is there a figure it needs to reach or is there pressure on it to reduce the number of its NPLs significantly by year end? That would most likely only be achieved by way of a step change reduction through a portfolio sale. Ulster Bank has already undertaken portfolio sales, but that type of sale is controversial. While the Central Bank, the Department and bank CEOs always tell this committee that protections travel with the loan and the mortgage contract remains unchanged, we have also heard from the Free Legal Advice Centres, FLAC, and the Irish Mortgage Holders Organisation, which have outlined a number of specific instances where they felt that customers were disadvantaged when their loans were sold on. The most significant change is the change in attitude. While Ulster Bank may make every endeavour to reach a restructuring arrangement with a borrower, the same may not hold true for the fund that purchases the loan because that fund takes a much shorter-term view regarding the loan's return. Is there an onus on Ulster Bank to reduce its NPL rate further this year? If so, are further loan portfolio sales on the table and actively under consideration?

Ms Jane Howard

I might start and Mr. Stanley might wish to add something afterwards. We do not have a specific target, but there is an expectation that we will move towards 5%. We are likely to set that ambition for next year rather than this year. However, we indicated during our third quarter results last year that we would be expecting to conduct a further sale. We still expect that, but our first priority is to help all of our customers to find a solution.

Is there a timeline for that potential further loan sale and will it involve principal dwelling homes, PDHs, which are family home mortgages, as well as buy-to-let and commercial loans?

Mr. Paul Stanley

I will address that question. As Ms Howard stated, we took a provision in the third quarter of last year for an estimated size of loan sale, but we are going through a process of engaging with all customers who will engage with us to define what the perimeter of the loan sale will be. It will principally comprise PDHs because most of our non-performing buy-to-lets are effectively gone at this stage. The key for us is working with our customers on trying to find out whether, due to the points that Ms Howard has mentioned, there are long-term sustainable solutions for them. If there are, they will not form part of the perimeter and we will have to adjust appropriately whatever provisions we have taken.

Except they will remain non-performing on Ulster Bank's books for a period even if they are restructured.

Mr. Paul Stanley

Correct. That is a discussion that we have had with the Central Bank. Ultimately, we will end up with the right answer provided customers keep to the forbearance solutions that are in place. It will take a little bit longer-----

If Ulster Bank can get them on a pathway to move away from being considered NPLs.

Mr. Paul Stanley

Correct. It will take a bit longer for us to reach our ratio. That has been the discussion with the Central Bank. In general terms, we will end up in the same position.

I wish to raise the issue of mortgage rates. Almost a year ago - in June 2018 - Ulster Bank announced the lowest rate on the market, namely, a two-year fixed rate of 2.3%. How has that gone for the bank? Has the bank promoted it sufficiently? It is a two-year offer, so it is not long term. At the time, however, it was by some distance the lowest rate on the market. I believe it still is the lowest even though others are coming closer to it. I had hoped that it would start something of a price war in mortgages, although our guests might not have welcomed that. Is Ulster Bank getting a return from it? Is the bank winning new business on the back of that rate?

Ms Jane Howard

I will provide the high-level view, and I am sure Mr. Coyle would be delighted to discuss some of the progress we have made. We offer a range of rates to all of our new and existing customers. We have the lowest fixed rate on the market at 2.3%, which fits with our strategy. We are finding that more than 80% of the new mortgages that we are writing today are on the fixed rate. Customers tell us that they like the rate and that it gives them certainty of payment. The latter is important to our customers. We deliberately went out to compete because we wanted to grow our market share in mortgages.

Perhaps Mr. Coyle will also inform us of the bank's current market share of new business being written.

Mr. Ciarán Coyle

Yes. The Deputy is right about the two-year fixed rate. We also have the lowest four-year fixed rate in the marketplace. To build on Ms Howard's point, we have seen good momentum in the business. I will help the committee to understand what we have done. For nearly a year, we have had an extensive marketing campaign across media - outdoors, radio, cinema, etc. Judging by our marketing team and market analysis, this has had the exact level of impact that we wanted. In recent months, we invested in and launched a new online portal to make it easier than ever for customers to switch to the new rate. If an existing customer is on a variable or fixed rate, he or she can go online from the comfort of home and change to any of our new rates in a matter of minutes, 24 hours per day, when it would previously have taken a couple of weeks.

Regarding performance, when we last appeared before the committee, we mentioned that our natural stock in this market was approximately 14%. We were slightly behind that figure then. At the end of the first quarter of this year, though, we had a drawdown market share of over 16% and our approvals were slightly higher than that. To build on Ms Howard's point, we are hearing from our customers that they like the clarity and certainty regarding what they pay. Effectively, rates remain important to our customers. We are making other changes beyond the rates to make the process of coming to us easier and faster. It is a work in progress, but it is having an impact as well.

Ulster Bank's market share of new mortgage business is in excess of 16%. Does the 2.3% two-year rate apply irrespective of the loan-to-value, LTV, ratio? Is it open to existing mortgage holders who are in negative equity?

Mr. Ciarán Coyle

To anyone who applies, although there are some exceptions. Obviously, we have our own credit criteria and the Central Bank's prudential rules apply. To avail of the 2.3% rate, one must be a customer not looking for an exception to the Central Bank's rules. Aside from that, applications must meet our credit criteria.

Some 59% of Ulster Bank's mortgage book is tracker related,-----

Mr. Ciarán Coyle

Yes.

-----with 17% of mortgages on variable rates and 24% on fixed rates. The 17% on variable rates has a €2.8 billion book value. How many mortgages are still paying a variable rate of 4.3%?

Ms Jane Howard

Approximately 10% of the book.

Ms Jane Howard

Yes. Some people choose a variable rate for a good reason. We ensure that we write to those customers on an annual basis and bring to their attention the fact that we have other rates on offer.

How many mortgages does that figure translate to approximately?

Mr. Ciarán Coyle

It is probably 10,000, but that is an approximate figure.

I would imagine not all of them are in the LTV category between 80% and 90%. Their LTV may well have improved over time but they just did not do anything about it.

Mr. Ciarán Coyle

They have not responded in one way or another to our correspondence. The Deputy is correct.

The bank writes to them once per year. Customers who have a lower LTV ratio and want to remain on a variable rate can change and move down the LTV band and get a lower rate-----

Mr. Ciarán Coyle

Yes

-----online using the Manage Your Mortgage portal. Is it correct that they do not even have to send in an up-to-date valuation?

Mr. Ciarán Coyle

That is correct. The online portal works on the basis of the initial valuation we have of the property. It corresponds with the value in the house price index we take from the Central Statistics Office and it applies the LTV based on that. If, however, a customer believes his LTV band is better than that derived from the index, he can get a valuation done. If it proves to be correct, we will apply the correct LTV band.

The Bank is not competing in the cash-back space.

Mr. Ciarán Coyle

No, we are not.

How do the delegates find the dynamic within the market? Many individuals, including first-time buyers, see an attraction. I hold the view that they end up paying more in the long run because they are paying a higher interest rate, but it can be difficult for people to weigh up where their best long-term interests lie, and €10,000 or €15,000 upfront can be attractive if one is buying a home and needs to furnish it. How does this play out in the market? Cash-back packages are attractive to individuals on the one hand but the bank believes it is offering better long-term value. How is it finding people's ability to weigh it up and balance what is in their best interest?

Ms Jane Howard

We have chosen to be very clear on our rates so people absolutely understand them, as the Deputy said. We do actually support the first-time buyers also. We have, however, chosen to do so in a way that supports them with what is relevant to their buying of their home. Mr. Coyle shall talk a little about that because it is important to us.

Mr. Ciarán Coyle

There are supports in addition to the leading fixed rate. We help make contributions to people's legal fees, because these are practical costs that customers face. We also help make contributions towards life assurance, which is also important to customers, and we make contributions towards their home insurance. We see it as a combination of the low rate plus other elements we know matter to our customers.

With regard to the dynamic, it is very dependent on customers' circumstances. The research we are doing backs up the fact that we are a fixed-rate-led mortgage provider. That is our strategy and it has been for a period. It is because feedback indicates that value for money and rates are still the most important things to people. The certainty of a rate over a period and the transparency it brings are important. Home buying occurs at a busy time in people’s lives. Therefore, the best approach is being very clear on the rate and the duration of payments. It also involves giving people the best choices over two years, four years and seven years. We have rates across that whole period. So far, we can see the momentum this approach is creating in business.

Finally, may I touch on the tracker mortgage examination? I am sure Ms Howard is aware that Ulster Bank was pretty slow in getting up to speed and coming to grips with the tracker mortgage issue. It took a long time to identify the relevant accounts and pay out in redress and compensation. The message the bank is giving us in the questionnaire is that it is pretty much there, or very close to being there. I have a question on the overall numbers. The total paid to date for redress compensation and contributions towards advice is €120 million, give or take. The bank's overall provision is just under €300 million. Is the balance the operating cost of running the operation? Have the witnesses factored in a potential enforcement fine from the Central Bank in respect of the enforcement investigation that is under way?

Mr. Paul Stanley

The €120 million has been paid out to 31 March. There have been some more payouts since then. I have explained before that, out of €297 million, there is roughly a 50:50 split between the costs of the examination from our side and the customer compensation and remediation. One can take from this that there is still an element of around €20 million or €30 million odd still to paid out from 31 March. That is a combination of some customers we have got to since that date and the 190 customers who, to date, we have been unable to contact. We have highlighted that in the response also.

So the operational cost to the bank has been about €150 million.

Mr. Paul Stanley

It is roughly 50:50. Those are largely the splits that exist. We have not taken any significant estimates of provisions in terms of fines at this point.

Mr. Stanley said there are no significant estimates. Has the bank made any provision for a fine?

Mr. Paul Stanley

We have not disclosed any information on that. We will deal with that when it comes to our final discussion with the Central Bank.

Is that enforcement investigation ongoing or active?

Mr. Paul Stanley

As with the rest of the banks, it is.

I wish to ask questions similar to those asked by Deputy Michael McGrath on provisioning on foot of the tracker mortgage scandal. I assume the bank has a requirement to provide for the Central Bank fine. The witnesses are very clear that, so far, the bank wrongly took €95.54 million from its customers' accounts without their knowledge for many years. It kept that money from them and has only recently given it back. We all agree that the bank is going to be fined. Is it not the case that it has to make provision? Otherwise it would not be furnishing accurate accounts.

Mr. Paul Stanley

First, we are not disclosing levels of provision. I wish to be open and clear on that point. As I said, there is a level of provisioning but we do not disclose the amounts. They are estimates and it will ultimately be up to the Central Bank-----

In the bank's accounts, there is provision.

Mr. Paul Stanley

Yes, there is an estimate within that. It is not even an estimate; there is an element of provision within that to cover the Central Bank fine but we are not disclosing that detail.

When Mr. Stanley says "within that", what is "that"?

Mr. Paul Stanley

Within the €297 million.

So the bank is making provision within the €297 million.

Mr. Paul Stanley

Correct.

We know the operational cost is €150 million.

Mr. Paul Stanley

I said there are splits that are approximately 50:50. We are not disclosing.

I am aware that the bank is not disclosing but it does not take a genius to figure out it has made a tiny provision for the Central Bank fine. If the money it has paid out so far to customers is €120 million and, as the delegates have said, if there is another €20 million approximately to pay out because 190 customers have not yet been contacted, and if there is €150 million for operational costs, then a tiny amount is left.

Mr. Paul Stanley

We have an estimate in there of a provision. We are not disclosing that amount.

I know the bank is not disclosing it. By deduction, however, one realises it is absolutely minuscule. If there is €150 million for the operational cost, if €120 million has been paid out, and if the provision in total is €297 million, my 12 year old son at home could figure out the maximum provision for a fine by the Central Bank.

Mr. Paul Stanley

I have said there is roughly a 50:50 split between the two. It is not exactly a 50:50 split. We have a provision and we will not be disclosing the amount.

Consider the level of compensation that the bank has paid. The total provision for the compensation of customers is close to €300 million. The amount of compensation individuals got was €20 million. Does the bank believe that is adequate compensation given the scandal? Ms Howard's apology on behalf of the bank was welcome. She was not in her position at the time of the events in question. Given what the bank did to the customers, is the level of compensation appropriate?

Mr. Paul Stanley

The compensation levels are part of the examination process. They have been noted by the Central Bank as part of that process. If customers feel the compensation level is not appropriate given their particular circumstances, they have a right of appeal, including to the appeals panel. They can appeal to the bank and take their case to the Financial Services and Pensions Ombudsman. They can take their case to the courts, if that is a requirement. Therefore, there is a mechanism in place. The levels of compensation are higher than the standard levels of compensation we would normally have across other remediation areas.

What about those who had to employ the services of professional financial service advisers to help fight the bank and try to force it to acknowledge its wrongdoing? Has the bank agreed to cover the costs of the financial advice? I am not talking about the sum of money the bank allocated for independent advice as part of the tracker examination.

I am talking about people who hired expertise to force the bank to own up in the first instance, who have been involved in this for almost a decade and who have incurred significant costs trying to build a case to convince the bank that it had wrongly, illegally or whatever term we want to use taken their money and withheld it from them.

Mr. Paul Stanley

As the Deputy said, there is a standard cover with regard to fees at an individual customer level. I know that it is not the direction of the Deputy's question. Assuming they are customers of the bank and part of the tracker mortgages examination, as part of the appeals process they can bring this before the appeals panel. If they are not happy with that, ultimately they can bring it to the Financial Services and Pensions Ombudsman and the courts.

Why would they even have to go to the courts? Why should it not be a matter of principle? Let me take a section of a letter I have from one of the bank's customers. It states that with the help of the committee and Padraic Kissane, the writer was reinstated on a tracker mortgage last summer after a battle of almost ten years and that it was life changing for his family. He states he received redress and compensation and a cheque of a certain amount to cover both, and a sum was taken off his mortgage. He also states he is working with Mr. Kissane on an appeal. The letter also states the amount of compensation awarded to the individual dwarfs the amount he has had to spend over the past ten years in preparing a case for the ombudsman, working with various financial advisers and voluntary organisations to try to get the bank to own up to what its CEO, Ms Howard, has just apologised for to the Irish people. The amount of money he had to spend will not be covered as a point of principle by the bank. Mr. Stanley is telling me this customer must appeal, perhaps to the ombudsman or through the courts, for the bank to give him what he should never have had to spend in the first place because the reason he spent it was because the bank took his money.

Mr. Paul Stanley

We do look at individual circumstances. I do not recollect this particular instance and if the Deputy shares the letter with me I will certainly look at it.

I will ask the individual for permission to do. There are many cases like this. This should be a point of principle. If the bank were looking at a customer-centric approach, it would say to its customers that if they spent money on independent financial advice outside of the tracker mortgage examination to convince the bank it had done wrong to them and their families, then the bank would cover that cost. It should not take me, letters or the bank's customers to tell the bank it should be doing the decent and right thing but it is not doing it.

Mr. Paul Stanley

In the normal course of expenses put before us we do so. If there are particular circumstances that we need to look at individually I ask the Deputy to send them to me and I will look at them.

As I said I will do so but I encourage the bank to look at its policy position.

There were ten appeals to the ombudsman with regard to the tracker mortgage examination, five of which it appears were upheld. Is this the case? Were they upheld by the ombudsman or the internal Central Bank appeal? It is confusing.

Mr. Paul Stanley

To be clear, they are ten appeals with regard to findings from our own appeals. They are challenges that have gone to the financial services ombudsman from those that went to the appeals panel.

They went through the appeals panel------

Mr. Paul Stanley

Correct.

The customers were not happy and went to the ombudsman-----

Mr. Paul Stanley

Correct.

-----and the ombudsman found in favour of the customers on five occasions.

Mr. Paul Stanley

Yes.

Will Mr. Stanley give us an indication of whether this was with regard to the level of compensation or whether they were in scope? What categories of findings do they fall under?

Mr. Paul Stanley

To be clear, those customers were in scope. There are other complaints to the ombudsman from customers who are not in scope or for other reasons. These cases were in scope. I do not have to hand the exact details of those five as to the point of challenge but they were in scope.

The ombudsman found in favour of these customers, against whom the bank had already ruled, as had its independent appeals process. The ombudsman stated the bank was wrong and the customer was right. Has the bank now looked at each of these judgments and asked itself whether it should apply them to other customers?

Mr. Paul Stanley

We have absolutely taken the feedback to see whether it applies and whether we got something wrong in terms of some other cohorts.

Did the bank find out that any of the cases applied to anybody else?

Mr. Paul Stanley

I cannot recall whether we have or have not but we certainly have looked at those cases. I am happy to respond on whether it has changed any view we previously took.

I appreciate that. I thank the Ulster Bank for the volume of information it has given us in the questionnaire. It is very helpful. There is a question on rent receivers applied by the bank. It is a very small number. What is the number of fixed asset receivers the bank has applied? It was not a question-----

Mr. Paul Stanley

At the point of time in the questionnaire the number of receivers was five. They are receivers and not just rent receivers. They cover rent and the right to sell the property subject to various requirements.

Mr. Paul Stanley

At that point in time in December 2018 five existed.

Ms Jane Howard

I believe that since then it has reduced to two.

I want to go onto the issue of the bank's sale to the vultures and the announcement of another sale. Is it likely to happen before the end of this year?

Mr. Paul Stanley

If we are doing a sale the intent is that it would be before the end of this year.

There is no doubt, and it is not just me that is saying this as other committee members have also said it, that what the bank is doing is outsourcing its dirty work to a vulture fund that cares not for the bank's customers or the circumstances of their families. We said this at the time when the sales went through and, unfortunately, we have been proven correct. Has the bank carried out any examination of how the vulture to which the bank sold almost 4,000 accounts is treating the customers since the sale went through last year?

Mr. Paul Stanley

As to whether we carried out an investigation, we are certainly in contact for various reasons with the fund that acquired our customer base. The mortgage-to-rent scheme is an example and there was some news on that this morning. We are keen, particularly where we have agreed forbearance solutions or where customers are in the process of doing so, that it transfers as an intent to those buyers. Taking the mortgage-to-rent scheme as an example, it is a long journey to get there and the Deputy understands and appreciates this. I cannot recall whether we have done a specific review of the-----

The bank sold 1,742 homes and 2,195 buy-to-let properties to Cerberus. I am not sure whether the bank has disclosed the discount at which it sold.

Mr. Paul Stanley

No, we do not disclose the discount. We have discussed it previously.

It is a significant discount. We have information that Cerberus and Cabot, which is the servicing agent employed by Cerberus, are taking a very strong approach to the bank's previous buy-to-let customers. They are appointing fixed asset receivers and giving former customers 30 days to clear all of their arrears or they will appoint fixed asset receivers. The bank has employed two fixed asset receivers. Deputy Michael McGrath is right, and we are saying this over and over again, that it is not about the protections that travel with the customer and the mortgage, it is the attitude. The bank has appointed two fixed asset receivers. The vulture is taking a policy decision to tell customers to clear their arrears within 30 days or it will put in place fixed asset receivers. Does the bank have anything to say on this? It has hung out it customers high and dry. It has fed them to these vultures.

The bank knows fine well these were non-performing loans. That does not mean they were not being paid, it means the customers were not able to pay the full amount and that they were in arrears. The idea of any bank telling people to clear their arrears within 30 days or it will take its property is absolute madness. That is what Ulster Bank has done to almost 2,200 customers who have tenants. When fixed asset receivers are appointed, those tenants will be evicted. That is what is happening here.

I have a letter from Cabot to a mortgage holder that states Cabot has noted there are arrears owing on an account mortgage - in the number and amount of X - and to assist the person in clearing these the following payment options are available but the letter then just gives the IBAN and BIC details of the bank. The letter then states that failure to contact the office on receipt of the letter and clear the arrears in full within 30 calendar days from the date of the letter will leave Cabot no other option but to appoint a receiver over the secured property.

I can read Ms Howard other letters where former customers of Ulster Bank with multiple properties are in positive equity and are trying to sell the loans, but Cabot is saying "No". They are willing to sell the properties and pay off the full amount but Cabot is saying it does not care. It is telling them to clear their arrears within 30 days or it will appoint a fixed asset receiver.

We are told this is now policy within the vulture funds to which Ulster Bank handed its customer accounts, yet the bank has washed its hands and said it has nothing to do with it any more. Náire - shame on it for what it has done. We warned it that this was going to happen. This is what vultures do. Has Ulster Bank no regard for people who made the bank profitable during good times and who are finding it difficult to make full repayments? They are looking for a bit of time or support but are definitely not looking for this type of attitude. In fairness, it is an attitude that Ulster Bank would not show to its customers.

How many buy-to-let customers does the bank have? Can Ms Howard imagine her bank writing to customers tomorrow morning to tell them to clear their arrears within 30 days or it will repossess their homes? People would take their accounts from the bank overnight and they would say they are having nothing to do with that. However, the bank outsources its dirty work to the vultures and it is about to do it again. Shame on it. That is why we need this committee to pass my legislation, which will put in place a statutory responsibility to do what Ulster Bank should do anyway, that is, live up to the standards of the Central Bank, which says it should ask for permission before it sells to a vulture. I ask Ms Howard for a response on how Ulster Bank has treated its customers.

Ms Jane Howard

The Deputy referred to the future loan sale. Let me give a little colour. As I said earlier, we are absolutely committed to contacting our customers even more, up to 18 times over two months, to see if we can help them to get onto a sustainable solution or another option. That is very important because we are exploring everything first. We have contacted nearly 10,500 customers in recent months, 2,500 of whom are in the early stages. Some 5,000 of those are engaging with us and are co-operating. I am using the word "co-operating" because that is the CCMA definition. Of those 5,000, some 4,000 were offered a long-term solution and 1,000 were looking at different options. We then have nearly 3,000 customers who are not contacting us and not engaging with us. That worries us because we believe, based on the 5,000, that if people contact and engage, we may be able to help them.

Do they pay nothing at all?

Ms Jane Howard

They are paying a contribution but-----

They are, therefore, engaging. They are engaging every bloody month when they are handing over their money. There is a reason I say this. Ms Howard is dodging the question. I know some of these cases where the loans have been sold to a vulture fund and the people are about to have their property taken from them and their tenants evicted from their houses. They are engaging. They are paying the maximum amount that they have paid. While Ms Howard says that they are not contacting the bank, they are paying.

Ms Jane Howard

They are paying an amount but it is insufficient to cover the amount of the mortgage. We are trying our best to contact them and to ask them to get in touch with us to see how we can help them. As I said, where we have done that, in four out of five cases, we are able to find a solution for them. However, it is very hard for us to work with customers when they are not contacting us. We exhaust those options before we come to the sale. If any customers are listening today, we want them to get in contact with us and we will do whatever we can to help people.

I know some of these people; I have seen their accounts. Ms Howard is giving the impression, in a very articulate way, that these people are somehow scammers and that they are not engaging with or contacting the bank.

Ms Jane Howard

Not at all.

Let me put this point. Is it not the case that Ulster Bank sold to these vultures accounts of people who were both paying and engaging with the bank but who could not meet their full repayments, and they are now in the grips of the vultures, which are telling them to pay up within 30 days or they are taking the house and will sell the property with vacant possession, leaving their tenants high and dry? Is it not the case that they were both paying and engaging but, under Ms Howard's terms, the bank was not able to find a long-term solution so it decided to sell their accounts to the vultures?

Ms Jane Howard

I want to come back to the Deputy's first comment. I do not in any way think that these are people who are not interested in trying to help. I think there might be fear of contacting the bank and there are all sorts of reasons. That is why we are urging people to get in contact with us. I have met people who are in arrears and people in NPL status. There is a range of reasons they get into that situation. At one extreme, there are incredibly sad situations or part crisis, and there may be illness and all sorts of reasons. We genuinely want to try to help those people. At the other extreme, when we have contacted people, we found that people have some money and they are able to get completely up-to-date with their arrears and get onto a sustainable solution. We do not judge anybody at all. It is all about trying to see what we can do to help them, and we do all of that before we do a sale.

Has Ulster Bank sold mortgages of accounts where people were making partial payments and had engaged with bank?

Ms Jane Howard

We have sold mortgages on which payments are being made that are insufficient to cover the debt.

Where they were engaging with the bank.

Ms Jane Howard

They were engaging with the bank in terms of paying off money. They were not co-operating in terms of finding a solution.

That is fine. I wanted to make that clear. I would not like it to be painted that the people whose mortgages are being sold are people who are unwilling to make contact with the bank.

Second, what does Ms Howard have to say about the fact Ulster Bank has sold these mortgages to a vulture, which has adopted this practice of demanding payment within 30 days of all the arrears or else it is taking the asset?

Ms Jane Howard

I am not aware that that practice is in place here in Ireland but we will look at it. They are covered by the same regulations in terms of the way they have to treat the customer.

With regard to buy-to-let property, is there anything to stop the vulture from asking for arrears to be cleared within 30 days or appointing a rent receiver? Ms Howard knows the answer to this question because her bank could do it in the morning. It would not do it because it would be absolutely appalling to do that, but vultures can do it because they do not give a damn. They are here for a couple of years. They are not interested in farming loans, student loans or deposits. They are just interested in making as much money from the sale of the portfolio from Ulster Bank with the haircut it gave them.

Ms Jane Howard

For our customers who go in there, conditions are attached to the term and they have to respect that for the duration that is in place.

Does Ms Howard care that some of customers in Project Scariff had their details released - this is from the same crowd, Cabot - including names, contact information, job details and outstanding balance? Not only were they told to clear their arrears within 30 days or the property would be taken and their tenants left high and try, there was a data breach, which resulted in their names, contact information, financial details and outstanding balances being released. Ulster Bank put them in this position because it sold them. We told the bank that if it sold to vultures, they would not care. They play fast and loose. Ulster Bank has a responsibility to treat its customers in an appropriate manner. It gives a write-down to the vulture funds but it will not apply that to its customers.

Ms Jane Howard

I have explained the process we are going through and how we are trying to reach out to customers.

Has Ulster Bank contacted the agent it sold these to in order to point out these were its customers and to ask what it is doing and why it is orchestrating strategic default, and that it has been involved in a major data breach and released the financial information of customers?

Ms Jane Howard

I was not aware of the data breach but that is something we will pick up, as it is clearly unacceptable.

With regard to the 10.3% of NPLs, how many loans would have to be cured or sold in order to reach 5%?

Ms Jane Howard

That would depend on how customers work with us. We do not want to sell loans. We would prefer the customer to remain with us on a long-term solution within the bank. The more successful we are in that, the fewer we will have to sell. It will very much depend. As I said-----

I am asking both about sold and cured loans. What is the total figure?

Mr. Paul Stanley

To deal with cured or sold, it would take €900 million to €1 billion of movement from the current NPL position.

The problem is that when we look at the position of mortgages in arrears for more than 90 days, that does not give a picture of NPLs because there could be ones which are not in arrears but which could still be NPLs. For example, we know that those that are 90 days-plus are all NPLs.

There are 7,280 in arrears of 90 days-plus so one can assume there are at least 3,600, if not more, that either need to be cured or sold to reach the 5% target.

Mr. Paul Stanley

It would be that type of range.

Is the bank considering other solutions aside from the standard solution it has applied to date to try to cure as many of these accounts as possible?

Ms Jane Howard

Yes. Mr. Stanley will expand on it.

Mr. Paul Stanley

As I pointed out earlier to Deputy McGrath, all of those customers are going through a renewed SFS because we are finding that their circumstances have changed. If their circumstances have changed and they fit into a forbearance solution, it will take a little longer to take them out of NPL after working through a forbearance solution but that is the route they will go.

Will the bank consider debt reduction as part of the overall plan for PDHs and buy-to-lets?

Mr. Paul Stanley

As we said previously, we are not doing write-offs per se but we have modified mortgages within our suite which, in effect, on a split mortgage basis allow for - I will not use the words "debt reduction" - that level of restructuring.

However, there is debt reduction. When the bank sold Project Scariff to Cerberus, it wrote off hundreds of millions of euro on the accounts-----

Mr. Paul Stanley

Yes.

-----but it will not do that for the customers.

Mr. Paul Stanley

As we work through on an SFS basis, we will certainly look at the economics of the final perimeter volume that we put into a loan sale. The economics that work in favour of both us and the customers, which they can in some circumstances, is something to which we will give consideration.

My final question is about the volume of repossessions that have taken place, whether they are voluntary surrender or court repossessions, and the properties now in the possession of Ulster Bank. How many houses are in the bank's possession and how many of them are vacant?

Ms Jane Howard

We have just under 100 in our possession. There is broadly a 50:50 split between PDHs and buy-to-lets. I do not have the numbers for vacant possession. They have come to us through voluntary surrender. We can let the committee have the information on how many are vacant.

What is the process? What does Ulster Bank do when a property comes into its possession? Does it go straight onto the market or does the bank reach out to the Housing Agency? If there are tenants in the property, does the bank sell it with the tenants in situ or does the bank demand vacant possession? What is the turnaround time? The bank has 100 houses but that is a rolling number because more will be coming through and some may be sold.

Ms Jane Howard

We have a process in place. We do not rush to sell it, particularly if there is a tenant and a tenancy agreement in place. We have a process and it takes some time.

Does the bank only sell to the private market or does it reach out to the Housing Agency?

Mr. Paul Stanley

To date, we have been largely selling to the private market.

Is there a reason for that? Ulster Bank has not received support from this State. Other banks in which we have a shareholding tell the Housing Agency, given the crisis in housing, that they have 600 houses, for example, in particular locations and ask the agency to express an interest in the housing. Is there a policy decision to go straight to the market where the bank would get a better price? Why has the bank not engaged with the Housing Agency? When the bank sells, does it do so with a requirement for vacant possession?

Ms Jane Howard

We will have to revert to the Deputy on the first point. If we can work with the Housing Agency, we would be delighted to do that. I will refer back to the committee.

Mr. Paul Stanley

Regarding buy-to-lets, generally it is easier for us to sell with vacant possession. It is not always the case that we do so, but it is certainly easier for us to do that.

The bank has sold property with sitting tenants.

Mr. Paul Stanley

I will have to confirm that, but it is easier for us to sell. We have taken our time in some instances where there are sitting tenants.

When Mr. Stanley says "easier", does he mean more profitable?

Mr. Paul Stanley

It is easier to bring it to the market and, yes, ultimately more profitable based on the ease of sale.

Does the bank worry that the family to whom it is giving notice will end up in a hotel room or sleeping in a car?

Mr. Paul Stanley

I would have to look at the individual circumstances of those sales. I am just being open with the Deputy in saying that from the sales perspective-----

I ask Ms Howard to read the latest report which gives voice to the children who find themselves in emergency accommodation and to consider the bank's policy of selling properties and asking the tenants to leave or evicting them as part of that, particularly in cases where it is evicting people into homelessness and its consequences. I am aware that the bank is not required to have due regard to that, but we are all human. When it hears about the impact on a three or five year old the bank might consider its position of seeking vacant possession or at least asking the follow-up question of whether the tenants will have a home to go to when it evicts them from the premises so it can increase its profits for its shareholders.

Ms Jane Howard

Let me take that away. I do not know if we perform that practice but I will examine it.

I thank the representatives for the opening statement. How much profit did the bank make in this jurisdiction last year?

Mr. Paul Stanley

In effect, €15 million. It is a very low level.

However, it made €23 million in the first quarter of this year.

Mr. Paul Stanley

We did, but impairment write-backs were a large part of that rather than day-to-day operating performance.

How much corporation tax did the bank pay out of the €15 million?

Mr. Paul Stanley

In terms of overall tax we paid last year, which includes social contributions, corporation tax was €1.5 million and our VAT was €30 million. We paid payroll taxes and property taxes. We also paid the bank levy, which is relatively high for Ulster Bank. Taxes to the State, all told, were approximately €75 million under all those headings.

Corporation tax on the €15 million was €1.5 million.

Mr. Paul Stanley

Yes, but the bank levy was €25 million.

Yes. The dividend the bank paid to the RBS seems quite high at €1.5 billion in January.

Mr. Paul Stanley

The level of capital we hold in the bank is excessive. It is much higher than that of the other Irish banks. The level of capital, our core equity tier 1 ratio as it is referred to, is north of 27% at this point. Our internal requirements would see the bank at 14% or 15% so, in effect, we hold double the capital we need. That capital must earn a return or it should go back to the shareholder. It costs us just physically having that capital sitting on our balance sheet because we must invest it in what are termed "high-quality liquid assets", which earn zero to negative returns. There is a rationale in us paying back and getting to a more normalised level of capital within the bank, which will help its overall performance.

There is also a rationale when people look at that in terms of €1.5 billion going to RBS, which is 66% owned by the British Government. On the one hand, that money is being given to RBS and, on the other, the bank is trying to get vacant possessions and selling properties to vulture funds, which is causing a great deal of hardship. Is Mr. Stanley saying they are not connected at all?

Mr. Paul Stanley

I do not see those as connected. The British taxpayer, when Ulster Bank was both North and South, put £15 billion into the bank.

Mr. Paul Stanley

It was not the Irish taxpayer who put that money in. There is a higher level of capital and it is appropriate that it is paid back. However, that is subject to ongoing regulatory approval. We do not just pay it at our behest.

The bank has €292 million in deferred tax assets.

Mr. Paul Stanley

That is correct.

That will be reclaimed over nine years.

Mr. Paul Stanley

That is the intent today.

Our tax losses are larger than that. That is the deferred tax asset itself, no more than the other Irish banks' deferred tax assets would be lower than their overall tax losses.

I believe that Ulster Bank Ireland is getting a good deal. I suppose that the whole issue is the moral aspect. I am aware that the Government allows the banks to do this with deferred assets and so on but when we are in a situation with such homelessness - and considering Deputy Doherty's contribution on the vulture funds and people being given 30 days to pay up or get out - there is a moral obligation on the banks to look at things in the round, to treat Irish citizens a little bit better, and certainly not to contribute to the homeless crisis as it is.

I would like to get further clarification following on from Deputy Doherty's point because I am not clear on one part around people who needed help and assistance in trying to get back the very substantial amounts of money that was robbed from them. Many people had their lives destroyed because of it. Those people had to engage whatever supports or services they could, and not just legal services. Will Ulster Bank Ireland allow for that within the compensation scheme? I was not clear on that from the response. What is the bank's policy on that?

Mr. Paul Stanley

Within the compensation scheme there are agreed amounts for the repayment of fees. If customers feel that this has not been sufficient for compensation, aside from some exceptional circumstances we would certainly look at that for Deputy Doherty. It is a reasonably straightforward process and we would help with that process in bringing those additional asks or requirements to the two levels of the appeals panels. It may not just be about fees. It could be lots of other issues also.

Okay. There is no such thing as a policy of barring anything or that the bank is just going to look at legal costs. The bank will look at all of the others costs associated with it.

Mr. Paul Stanley

There could be accountants' costs and legal costs, but I use those two as the principal examples.

We will follow that and hold the bank to that. I will now turn to the bank's charges. AIB charges too much for the use of ATMs while the Bank of Ireland charges 20 cent per debit card transaction. Ulster Bank, however, combines the worst of both worlds by charging 35 cent for an ATM withdrawal and 20 cent per debit card transaction. Why is that? Ulster Bank also charges for contactless payments. Why are the charges so high?

Ms Jane Howard

I will set some context here and then I will ask Mr. Coyle to cover some specifics. We are talking here about the current accounts. Fees and charges are a commercial decision. The fees we have introduced in some way reflect our strategy. As a bank we want to offer physical and digital choices for our customers. Clearly it costs more depending on which channel a person uses to do his or her business. We are moving in line with the market. Our fees will remain under review, as one would expect, and-----

Does Ms Howard agree that the Ulster Bank charges more than any other bank?

Ms Jane Howard

We would look at it in the round. This is a commercial decision. When we look at our fees and charges and the way we introduce them, we charge customers based on usage. I would not say that we charge more. I would look at it in the round and the full service offering we give, including having the lowest mortgage fixed rate on the market, as referred to earlier. It is the entirety of the package. Our customers can choose the preferred way to bank. It is more expensive in some channels than others but we have a team of people ready to help anybody, in the branches or over the telephone, who would like to look at different ways of doing their banking. Some 25% of our customers do not pay any fees; this is largely those customers who are over the age of 66 and our students.

Mr. Ciarán Coyle

I will build slightly on that to help the committee understand our thinking behind tiered charges. It is interesting that we have created a tiered charging model that is aligned to the level of costs we incur. If somebody chooses to come into a branch to take money out over the counter there is an 80 cent charge. As Ms Howard has said this reflects the commercial reality of us employing people, premises, security and so on. An element of the charge is for these overheads, if the customer chooses to do it that way. We have people in branches up and down the country to support such customers. The Senator referred to the ATM fee. If a person wants to take money out through an ATM then it is a lesser charge of 35 cent. This charge is driven by our costs for cash in transit fees when moving money around the State. We also must secure the ATMs and the committee will be aware of the challenges with crimes on ATMs recently-----

Those were the other banks. I am drawing a comparison with the charges of other banks.

Mr. Ciarán Coyle

I am just sharing with the Senator the tiered model. If someone chooses to use the chip and pin payment, a direct debit or a standing order it is 20 cent. The Senator also commented on our contactless payment charge, which is 1 cent. The cost to us of effecting a contactless payment is not materially different from a person paying with chip and pin, but we recognise that in the market more and more people are using contactless payments for transactions under €30. It is quicker for customers and better for retailers. We want to encourage that. We give the contactless charge at a more discounted rate because we can see this is where the market trend is going. On our overall fees versus those of our competitors, as Ms Howard has said I cannot comment on the cost base of our competitors and what their commercial decisions are. In the round and given the options and transparency of fees we are satisfied with the blend we have right now. The fees and charges, as was indicated, remain under review. Putting this into context there are also the 25% of customers who are either students or those aged over 66 who do not pay fees and some 35% of customers who pay maintenance fees, which leaves us with 46% of people who pay the transactions fees. This is the way we have been thinking about it. I hope this is helpful in explaining the way we have approached it.

Customers will decide for themselves on those charges. Who sets the €30 limit for contactless transactions?

Mr. Ciarán Coyle

Typically it is the card schemes, but I could be wrong on that. I am aware that this is changing. If one uses Apple Pay with an iPhone some retailers will allow €50 or €60 or there is no limit. The transaction limit is probably a combination of the retailers and the merchant fees, but I am happy to come back to the Senator with a clarification on that.

I believe that the limit of €30 per transaction for contactless really needs to increase.

Mr. Ciarán Coyle

The trend overall in the volume of transactions happening through that channel would suggest that this is a potentially likely outcome.

Ms Jane Howard

It is. A tremendous amount of research has been done looking at how much difference it would make if the limit was increased by €10 or if it actually needs to increase from €30 to €60, and what an increase would do to the fraud environment. There are an awful lot of factors to be taken into account before the card schemes actually decide on the maximum amounts and a change to that. I expect that we will see changes and we might see them quite quickly.

Mr. Ciarán Coyle

On the charging scheme, we are committed to and have done significant training roll-out to colleagues in branches and telephony centres across the State. If a customer chooses to come in and make a transaction today that costs 80 cent and wants to reduce that charge we have people trained who will genuinely help them and understand how to help them to reduce that cost, and who will support them in doing that.

I understand that Ulster Bank Ireland has 88 branches now.

Ms Jane Howard

Yes.

Are there plans to close any further branches-----

Ms Jane Howard

No.

-----or to make any more cashless banks? I am aware the bank has a number of cashless branches.

Ms Jane Howard

As Senator Conway-Walsh has stated we have 88 branches. There are no plans to close the branches. In fact, we have actually increased our physical presence in recent months. We are also investing in the branches. As I said in my opening statement, our strategy is high tech and high touch because we know that customers like their daily banking to be effortless - they tell us this. They enjoy using contactless payments but there are moments in people's lives when they want to have a named person and see someone. At times, sadly, this can be during bereavements or it can be at nice times when a child is born or when seeking a mortgage.

Our customers tell us there are certain life events when they want to be able to speak to somebody. That is why branches are so important for our personal customers.

With the broadband debacle, we are looking at the €3 billion and what will be got for that. We are looking at another seven years and whatever advances will be made in banking. As a rural dweller, I certainly do not trust that broadband will be delivered, even in the next seven years, to the area I come from. Banking technology will advance all the time but if people do not have the necessary connectivity, that will be a real problem with regard to social exclusion and excluding customers, especially in rural areas.

Ms Jane Howard

We cannot talk about the broadband programme, when it will roll out and how effective it will be. We have evidence that shows that seven out of ten of our customers are able to use digital services easily. There are two ways of using it. If one is carrying out transactions, it is generally in a place where broadband is available. The broadband issue is a real problem when doing banking from home. We have branches which have broadband and customers are very welcome to come in and use our premises to do their banking. We would love to help them.

Mr. Ciarán Coyle

I recognise and relate to the point about challenges in rural areas compared to urban areas. With regard to the way we are thinking about our branches, if it helps the committee, we have 88 branches, we have mobile banks, community bankers, community protection advisers and mobile mortgage managers. As Ms Howard said, there are physical and digital services. The statistics show us that increasing numbers of people choose to engage with the mobile application, Internet banking or contactless cards for transactional activities. We will continue to invest and we need to invest to secure that, upgrade systems and stay in line with regulatory changes. New innovators in non-banks are coming into the markets. We have invested tens of millions of euro in physical spaces in branches in the last couple of years, across a host of measures. One is to put broadband into all of them. Of the 88, 86 are done. The role of the branch and what will happen inside it will invariably continue to change. It will be less transactional. The transaction capability will be there but it is more about supporting customers to give them advice, insight or help.

It is important for us as a committee that people will have human contact when they choose to have it, especially so that elderly, loyal customers are not excluded.

Mr. Ciarán Coyle

Specifically on that point, beyond the physical branch, we have been investing more time and money in outreach, especially in rural areas. The Senator will recognise areas such as Glenamoy where we never had a presence historically. We have community bankers going into those areas, in local community centres, meeting elderly people or, indeed, anybody, to help to do a couple of things with them. It is to try to help them with financial education, to bring them up to speed with how things are changing and how we can help them. Critically, we help them to protect themselves against fraud and scams, which are a growing issue. People have a view that frauds and scams are a digital concept. They are not. They take all forms. We are putting our community bankers in the communities, especially focused on rural areas. We have held 70 events so far this year, across those parts of the country, helping people with that.

Deputy John McGuinness resumed the Chair.

I welcome that and agree with Mr. Coyle about fraud and scams. I had €2,000 taken from my credit card a couple of weeks ago through a Facebook account. I was apparently buying advertisements for sewing machines in Australia and ski jackets somewhere else and €2,000 went just like that, over a number of transactions. There are more and more ways in which people are looking to scam others. I will not ask about the carbon credit trading matters that Ulster Bank has been involved in, although the witnesses might comment on it.

Ms Jane Howard

I am sorry, I did not hear.

Carbon credit trading and Ulster Bank facilitating or-----

Ms Jane Howard

I will not comment on that case other than to say that we take law and regulation very seriously, whether that relates to anti-money laundering, knowing customers or regulations. I cannot comment on that case.

I think there are financial crimes there. The anti-money laundering guidelines need to be revisited. I think that case will evolve. I want to ask two more questions. One relates to deeds of houses. If somebody has a loan on a house and pays it off in full, then asks at a local branch of an Ulster Bank for his or her deeds back, that person is told that they cannot be found. The person can ask at the central office, then this can go on for years, and the person has to take a legal case against Ulster Bank. Where are people's deeds held and can Ulster Bank lose deeds? People are told at local branches that the deeds have been lost. Surely people are entitled to get their deeds back without having to engage barristers and solicitors?

Ms Jane Howard

They are entitled to get their deeds back. We have a defined process that within ten working days of a person asking for deeds, they should be back in his or her hands. If there are particular cases where we have clearly got it wrong, will the Senator let us have them so that we can look at them? That does not sound right at all.

I will. On 18 August 2011, a person started to write to Ulster Bank. It is now 2019.

Ms Jane Howard

If the Senator lets us have that, we will personally look into that.

Mr. Ciarán Coyle

We will personally look into it. Absolutely.

I will leave it at that.

I welcome the witnesses. I wish Ms Howard well in her new job. It is important that we have a strong banking sector in the country. I have two brief questions. The witnesses said their two-year and four-year fixed rates are the lowest in the country and that they have a new portal that will help to change mortgages from two to four or whatever. That is welcome. They also say that they are looking at legal fees, life assurance, life insurance and house insurance, and making contributions to them for customers. Do the witnesses look at how much property tax would be when a client comes in? Do the Revenue Commissioners contact the bank about the valuation of a house? Is there communication between banks and the Revenue Commissioners? Do they go into any detail about, and make provision for, property tax when the client takes out the mortgage? It is quite significant in some cases.

Ms Jane Howard

When somebody approaches us for a mortgage, we look at the totality of affordability. In that, we would look at all outgoings. We have a team of very experienced mortgage advisers who would be thoughtful about what the costs are going to be when somebody moves into or buys a new home. To that extent, we would expect property taxes to be included. We look at people's future outgoings to make sure that people can afford the mortgage they are taking on. I have not heard that it is a particular issue.

Mr. Ciarán Coyle

I have not either. If there is a particular case, I would agree with Ms Howard's comments that we would consider all outgoings and exposures for the customer and then use that as our credit criteria to decide on the lending. If there are particular cases-----

I do not have any particular cases but was wondering about the issue because in some cases the property tax is quite significant, maybe more so than insurance.

Ms Jane Howard

That is why we are very thorough. It looks like a very long, detailed form but it is important that we understand all the customer's future outgoings, to make sure that the customer understands what he or she is taking on.

Is there any contact between the bank and the Revenue Commissioners about the level of property tax or costs in particular areas?

Ms Jane Howard

Not that I am aware of.

The second relates to the sale of portfolios to vulture funds. It has been brought to my attention in some cases that where the loans are being sold and where the vulture fund wants to get vacant possession, be it through eviction or the sale of the home, in some cases, it is the bank - Ulster Bank in this case - rather than the vulture fund that serves the eviction papers on the client. When Ulster Bank sells its portfolio of loans, is it finished with them or does it still hold the papers and the rights to serve papers in this case if they are required to be served for court proceedings or evictions?

Mr. Paul Stanley

We will look at it but the only instance I can think of is that some loan sales are done in part and we still service the loans for a period of time before we hand them over to the servicer of the acquiring party. We will follow this up. It could be in those instances that even though the loan has been sold, it will be passed over for servicing six months later. It could be in those instances that what the Senator referred to has occurred.

When Mr. Stanley says Ulster Bank is still servicing the loan even though it has sold it-----

Mr. Paul Stanley

It is not on our balance sheet but it is still sitting in our system to calculate repayments and interest rate before it moves over because it is not an instantaneous transfer.

In all cases, when the bank sells the loan, it is finished. It hands over the deeds and everything to do with the loan within a certain period of time.

Mr. Paul Stanley

Within a period of time, yes. If the Senator wishes to give us the details of the case, we will be happy to follow it up.

If the bank has to serve papers relating to court proceedings, does it charge the vulture fund or is there a quid pro quo between the two?

Mr. Paul Stanley

Without knowing about that specific instance, there was a period of time where we were doing work for them where they were not being charged. Certainly they are being charged more, if not charged in their entirety now, for work that has been done for them but there was a period when they were not being fully charged.

I welcome all three witnesses and in particular, wish Ms Howard every success in her recent appointment. I want to touch on one item that has already been discussed, namely, non-performing loans. I want to get a few benchmarks. Ulster Bank is at 10% at the moment. Has it given a figure as to which percentage it is looking to get to?

Ms Jane Howard

We were asked earlier about whether we have a specific target. We do not have a specific target but the point I made is that it is clear from the regulators that there is an expectation that banks with non-performing loans in excess of 5% are regarded as having too high a percentage of non-performing loans. Therefore, there is a very clear expectation that we would move towards the European average, which is running below 5%. It is running at about 3.4%.

Is the ECB putting direct pressure on Ulster Bank to get the number of non-performing loans as a percentage down? Has the ECB put a timeline on it?

Ms Jane Howard

I would not say that it is putting direct pressure on us. It is very clear about the direction of travel. We all saw what happened in the crisis and we need to make sure that banks have strong balance sheets.

What is Ulster Bank's internal timeframe in terms of getting it down to the European average, which is just below 5%?

Ms Jane Howard

In terms of our non-performing loans, we submit to the regulator on an annual basis a forecast of what we are going to do. We have submitted that this year. Our priority at the moment is helping customers to get on to long-term solutions. Even though we have always contacted customers, we are now putting additional resources into contacting everybody to give every customer the opportunity to engage and co-operate with us so we can see if we can help them.

Is Ms Howard saying that at the end of 2018 or shortly thereafter, Ulster Bank made a submission to the ECB or the Central Bank here as to what its plan over the next 12 months is regarding dealing with non-performing loans?

Ms Jane Howard

It goes to both regulators.

When would that have gone in?

Ms Jane Howard

At the end of March - just recently.

Within that, what has Ulster Bank put forward for the current year?

Ms Jane Howard

Within that, we have set an expectation that we would want to be in or around 5% probably by the end of next year.

Ms Jane Howard

The reason I am saying in or around 5% is because regardless of whether we can get more customers on to a long-term sustainable solution, they will still be on our books as non-performing loans for up to two years.

I accept that. We are dealing with people on a daily basis. Their main concern is that their loans have been sold on to vulture funds or else they fear their loans may be sold on. We understand the long-term solutions. In respect of the proposal submitted to the ECB and the Central Bank, has Ulster Bank identified an element that will involve the sale of non-performing loans to funds?

Ms Jane Howard

What we have identified is that we will want to do a further non-performing loan sale. We cannot be clear about which loans will be in that sale until we have made this extra effort to give all our customers a chance-----

When will Ulster Bank know this?

Ms Jane Howard

We are contacting customers now. We started with 10,500. I gave some breakdown of that number earlier.

If Ulster Bank is going from 10% to 5%, has it quantified the number of loans involved?

Ms Jane Howard

We have a broad figure

Mr. Paul Stanley

I will give a broad figure. With regard to Deputy Pearse Doherty's question-----

I do not want Mr. Stanley to repeat-----

Mr. Paul Stanley

The simple mathematics of it is that getting from where we are today to 5%, which can involve, as Ms Howard noted, cures or sales, is in the region of €900 million to €1 billion in terms of-----

Has Ulster Bank identified how much of that €1 billion will involve sales to vulture funds?

Mr. Paul Stanley

We have made an estimate of what it might cost in terms of that figure of €1 billion if that is what we have provided for but we have not decided at this point what loans will make up part of that sale. That is why we are doing the standard financial statement, SFS, for all customers.

Is the figure €500 million?

Mr. Paul Stanley

We do not know. It will over the summer before we-----

Summer. That is all I need to know. My next point concerns Brexit. Ulster Bank is unique in an Irish setting in that it is one of the four large pillar banks but effectively has a presence in Great Britain, Northern Ireland and the Republic of Ireland. We are looking at Ulster Bank in the Republic of Ireland. Ulster Bank in Northern Ireland is a separate entity and both are subsidiaries of RBS. In respect of Ulster Bank customers and the Irish banking landscape, the witnesses noted that Ulster Bank has looked at a number of scenarios, including a no-deal Brexit, as a stand-alone bank. Can the witnesses elaborate on the implications of what unfolds in the UK for Ulster Bank in the Republic of Ireland?

Ms Jane Howard

The reason I described it in that way is because the UK will have its set of circumstances for Brexit, some of which will be similar to what is here in the Republic of Ireland while others will be quite different. What we in the Republic of Ireland are concerned about is our customers, who will face different challenges. Some of our customers export to the UK while others use it as a land bridge. Depending on what happens with Brexit, and none of us knows what will happen, we need to support those customers. Some of them will want to change their business model. Some are capable of doing that while others are not. Our focus will be on helping our customers in the Republic of Ireland. The reason I express it that way is because there will be a different set of circumstances in the UK. Does that explain it?

What I am more interested in is whether there are any circumstances in which Ulster Bank would become a stand-alone bank from RBS? Are there any situations that could arise in terms of the way Brexit unfolds that would lead to Ulster Bank in the Republic of Ireland becoming a stand-alone bank?

Ms Jane Howard

We are already a separate legal entity.

I accept that but it is a 100% subsidiary of RBS.

Ms Jane Howard

Yes. I cannot foresee why Brexit in and of itself would cause that situation to arise.

The final thing I want to touch on is the reference to 88 branches. Have new branches been opened, or did I read that incorrectly?

Ms Jane Howard

We have not opened new branches in the sense of a traditional branch. What we have done is opened what we call customer-facing pods, which are physical presences where customers can come in and talk to us in a private environment. They are very small and portable, and we are trying them at the moment in different places.

Is it like a mobile van?

Mr. Paul Stanley

No.

Ms Jane Howard

No. It is quite different from a mobile van.

Is it more like a pop-up bank?

Ms Jane Howard

It is more like a pop-up bank, but it is a permanent fixture that we can transport to different places. We are trying it in different places to see where customers like it most.

Mr. Ciarán Coyle

For the last couple of weeks, we have done it in Mahon Point in Cork.

It has not come to Limerick yet.

Mr. Ciarán Coyle

We will get to Limerick as well.

Ms Jane Howard

Not yet, but we will get there.

It is a prime spot.

Mr. Ciarán Coyle

As Ms Howard said, we are testing those in different locations. We are also running different events outside of the branches, including events to help first-time buyers, which we have run in most parts of the country. We are seeing really good customer engagement with it. As well as trialling those, by the end of this year we will be testing what new branch designs might look like in a couple of locations in Dublin. We think branch designs in the future will be different from what they have been in the past, and we spoke about that earlier. We are certainly not closing any branches, and we are thinking about how to broaden our footprint in different ways.

On the Brexit issue, I noted that Ulster Bank is participating in the Strategic Bank Corporation of Ireland loan scheme. We allocated a level. How do the Brexit loans work and was has the uptake of Brexit backed loans for customers been?

Ms Jane Howard

I cannot give the Senator details on precisely how it works.

I am more interested in the uptake.

Ms Jane Howard

The uptake has been low, and we have been discussing this because that could be quite concerning.

Mr. Paul Stanley

It has been very low.

Ms Jane Howard

I have been meeting customers throughout the country and many are facing different challenges. At the larger end, they are in a unique position where they can afford to, in some examples, set up an additional plant in the UK and mitigate the risk. At the very small end, they will be impacted by Brexit as, when, and if something happens and impacts the economy in Ireland. It will impact their ability to do business locally, as a consequence of the economy. There is also the middle group of customers, which is quite a range, but the biggest issue I hear about is not Brexit per se, but a lack of labour, both skilled and unskilled. One hears about it whether in the middle of Dublin, Monaghan, or Cavan. It does not matter where one is, that is one of the main things stopping customers from investing in their business or expanding it, and it worries them more than Brexit.

When one looks at the Brexit scheme, there is a concern about how prepared people are. We have held road shows, and we have also written to customers about the obvious issues. If one has been around as long as I have, one remembers things such as customs and excise and how painful that process is, and we need to make sure people have guarantees in place. When we look at indicators of preparedness, we are looking at things like that. For example, if someone is moving goods and does not have a guarantee in place, perhaps they do not understand that they will need that for goods to move, and then they would need an overdraft.

The question I am asking is if Ulster Bank has looked at the Brexit loan scheme, because it is effectively a conduit to get the scheme out. Are there aspects of the scheme that the witnesses would like to see changed, or that are not working? Is it tied into taking on extra staff, or is there a reason the uptake is so low? We are being told there are serious concerns around Brexit and being Brexit-ready.

Ms Howard was in the UK prior to coming to Ireland, and I would like to get her perspective in terms of what differences she sees in the Irish and UK landscapes. Where does she see the differences in exposures on Brexit, and how does she feel we are prepared as a country in terms of business and across spectrums? She brings an intellectual knowledge of what is happening on the ground in the UK with banking and business over the Irish Sea.

There are a number of aspects to my question, namely, whether the loan scheme, as structured, is the problem, Ms Howard's perspective on that, because she is looking at it, and a mark review on where she sees Ireland vis-à-vis the UK in terms of the landscape and the Brexit, financial, and banking implications thereof. I would like to hear her overall perspective as the head of one of the four main banks in Ireland.

Ms Jane Howard

First, in terms of the scheme, I have not heard from any customer that it is a problem or difficult. Let me take that away and we will follow up on that to see whether we are not hearing it because we have not been asking the right questions or listening well enough.

The financial services in the UK and Ireland, and the impact of Brexit, are quite interesting in that they are very different. If one is in financial services in London, which is clearly a central hub, the discussion there is about the fact that some of the skills and jobs have to be taken out of the UK and will be in a different part of Europe. That is the concern one hears in the financial services market in the UK in terms of how it works. When one comes to Ireland, we see that there are more banks choosing to make their European base in Ireland. They are not necessarily retail banks, but that creates different challenges here such as competition for people with particular skillsets. It is quite different in that regard.

When one comes down to customers, however, many things are the same. If the economy is struggling, whether that is in the UK or here, then the concerns for customers are exactly the same regardless. When one comes to preparedness, it is interesting because the UK has many schemes, including an RBS scheme directed specifically at supporting customers through Brexit, and they are not being drawn down either. It is interesting that we have that similarity. Even though governments, banks, and people are making help available, whether money or expertise and support, it is not being taken up in either Ireland or the UK.

I thank Ms Howard.

In Ms Howard's opening remarks she referred to her background in banking, which is quite impressive. When she took up her position here, what were the key differences between what she found when working in the UK and when she experienced the banking sector through Ulster Bank here in Ireland?

Ms Jane Howard

The first thing I would say is that it is an absolute privilege to be the CEO of Ulster Bank. In terms of differences, I will start off with customers, and that is interesting in that there is not much difference. When one thinks about customers, what they want, and what they tell us they want, it falls under five broad things. They want to be able to borrow money from us, save with us, invest with a bank, protect the things that are precious to them, or they want us to help them make sure their banking is done well. That includes education. Those five things are no different here than they are in the UK.

What about the culture?

Ms Jane Howard

I will come to culture in a moment because that is clearly a big topic.

As regards what is different, the dynamics are different in the Irish market and the UK market. For example, there is a lot more competition in the UK market than would typically be found here, in either retail or commercial banks. There are differences there.

It is a privilege to be here. We have more than 3,500 colleagues in Ulster Bank, and every day they come into work to do a great job for our customers. The reality is that we have processes that get in their way of getting it right for customers, and equally, we need to change so that we get it right for customers every time. The issue of consistency, which is key to culture, is absolutely crucial.

In terms of people wanting to do the right thing for customers in banking here, that is not much different from the UK. Would the committee like me to talk a bit about culture?

I would like Ms Howard to tell me the difference between the culture she found here and the culture she left behind in the UK. The question is about the comparison at senior level, so she can tell me that the dynamics are different here and that the processes often get in the way of good staff, but it was not the staff who caused the tracker mortgage issue. It was something else. Was it a process that caused it, or was it the culture from board level? What has caused the complete distrust of the public in the banking sector?

Ms Jane Howard

I will talk about Ireland specifically and then I will come to the UK, and articulate the differences. The Irish banks came out at the bottom of the Edelman trust barometer in terms of being least trusted by consumers. The Irish Banking Culture Board survey on trust also made very sorry reading, and that trust is lower than in the UK, where a banking culture survey was also conducted. The results here are lower in terms of consumers trusting banks. Even though Ulster Bank scored well relative to other banks, it is not where we want to be, and we absolutely recognise that we have lot do to win back the trust of customers here in Ireland.

One thing that has been in the UK for a while is the senior management or accountability regime that is being introduced here. What that did at a senior level was to make peoples' accountabilities and responsibilities very clear. The current plan is for that to be introduced here in the first quarter of next year at the executive level. It will also extend to board members, which it does not do in the UK, so we will go further here in Ireland than in the UK.

Culture is everything we do all the way from strategy down to how we serve the customer. It is the way I behave, and the way the executive team behaves. It is what we do and what we do not do. All of that will impact the culture of Ulster Bank, and if we lead and put the customers first in our strategy, decision-making, and making sure we have better services for them, then that is how we will be seen and trusted by the Irish public and Irish customers. They will decide on whether we do that well or not.

Ms Howard is in the wrong room. She should be in the Dáil Chamber because she has given a political response. I ask her to go back to it again. What differences did she find between the culture here that led us into the crash and the tracker mortgage issue, and where she came from in the UK?

It is clear that customers were robbed by the banks, not just Ulster Bank but others as well. The banks are just giving their customers' money back to them, and a lot of banks make a big song and dance about doing that, as if it were a good news story. It is not, because the banks are just returning the money that was stolen from their customers. The people do not have trust in the banks, and they are waiting for a banker who will give a straight answer to a question. Did Ms Howard find a rotten culture here that she could describe by comparison to the UK, or is it the same?

Ms Jane Howard

I have not found a rotten culture here. As I said, we have more than 3,500 people in Ulster Bank and they are trying their best to help our customers get financially fitter. It would be wrong for me to sit here and say that it is very different. The UK may be further ahead, but it has had the payment protection insurance, PPI, issue, and it had that earlier than we had the tracker issue here, so I think it has moved, worked on its culture, and focused on customers earlier than we have. It did have the same cultural issues, it just happened to be a different product. Our commitment, and my commitment, is that we are going to take culture very seriously. We are doing that and that work started before I arrived. It comes to focusing on one's customers, listening to them, and acting on what they are telling us.

We will leave that because we may explore it at another meeting. Ms Howard has qualifications in leading cultural change and ethical behaviours, and she is now on the Irish Banking Culture Board. How does she find that board?

Ms Jane Howard

We have only met once, and we have not yet met formally as a board. I am very much looking forward to being a part of that, and Mr. Justice John Hedigan has built a board with significant diversity around it. We should be very confident that it should be able to do some good in working with the banks.

To clarify a point the Chairman made, I have not yet got qualifications, but I am doing the diploma and it is a work in progress.

It is a work in progress. Tell me about the diversity in the Irish Banking Culture Board. It is mainly bankers, is it not?

Ms Jane Howard

No. Mr. Justice Hedigan has people on the board who are representing the public, such as Padraic Kissane who was mentioned earlier. I am a CEO on the board as a bank representative, and there are also bankers from the other banks at different levels and in different roles. Mr. Justice Hedigan has also chosen other members of society as well, so he has built a very diverse board of people who represent the customers or those who work in the industry.

Does Ms Howard find it strange that a board had to be set up to drive a bank or a banking sector to look after its customers? I find that to be the strangest thing ever, because regardless of what one's business background is, whether it is big or small, the customer is the key to the success of one's business. Here, the banks have to fund a board that will lead them to understand that, so they must really have gone off course in the last ten years.

Ms Jane Howard

The Chairman said earlier that we had lost the trust of the public, and I can only speak for Ulster Bank, but we are absolutely committed to improving the culture and putting the customer first. However, the trust was so badly lost that it was felt we needed more than just the banks working individually, and the Irish Banking Culture Board is seen as a way to do that.

Well, we will see what happens with that. What is Ulster Bank's slogan?

Ms Jane Howard

Help for what matters.

Help for what matters.

We will turn to the non-performing loans, the buy-to-lets and the private dwelling homes, PDHs. According to Ulster Bank's analysis of the sale, 1,500 accounts were sold in 2015; 2,874 were sold in 2016; nothing was apparently sold in 2017; and 3,937 were sold in 2018. In answer to a question earlier on, it was stated that Ulster Bank has almost €1 billion of loans still to sell if it is to get down to 5%.

How much work does Ulster Bank undertake on any individual loan, particularly on the mortgage end, or even the buy-to-let end? Those, after all, are homes for some people too. What analysis is done of the social consequences or the consequences to society arising from these loans being sold on? Does Ms Howard believe that the bank, until now, has endeavoured to get down to the real issues in each of these loans? Has the bank made its best effort to ensure that a roof is kept over those peoples' heads?

Does Ms Howard think her bank has done that?

Ms Jane Howard

I do not want to repeat what I said earlier, but we are absolutely committed, and we have invested additional resources to reach out to all the customers we have in a non-performing loan status. Those are typically the mortgage customers, and we are committed to engaging with them and to trying to help them get on to a solution, which is ideally to remain in their homes.

In some cases it might be helping with mortgage to rent or assisted surrender so they can go into another home they can afford to be in but we are committed to doing that. Only when we have done all of that do we consider the loan sale.

Ulster Bank Ireland sold on 2,874 and 3,900 loans in 2018. Is Ms Howard saying that it was not possible in every case to restructure and Ulster Bank Ireland had to sell on?

Ms Jane Howard

I cannot comment specifically but I know that there was and always has been an ongoing contact strategy to work with customers and to get them onto arrangements and that has been happening over the last ten years since the crisis. We are always trying to understand what customers can afford and how we can help them.

What about the performing loans? Has Ulster Bank Ireland sold performing loans in this bundle since 2015?

Ms Jane Howard

Not that I am aware of.

Mr. Paul Stanley

Not unless they are part of a combined structure from the customer.

Ms Jane Howard

Yes, but we try to separate those as well.

Mr. Paul Stanley

There might be one loan performing out of a number of non-performing loans so in that case it is a net non-performing position.

So if there is a net non-performing loan comprising other loans, such as a buy to let-----

Mr. Paul Stanley

There could have been some in those earlier sales.

-----that is a non-performing position generally.

Mr. Paul Stanley

Yes.

Ulster Bank Ireland does not separate them out.

Mr. Paul Stanley

In that structure, in terms of a sale, I am saying that in the case that there was a loan that a customer may have been making repayments on and which was not specifically in arrears but he or she may have had three other loans that were in arrears, the combined loans could have been in the sale.

What about separating out the bad loans and selling those to allow the customer some form of chance to continue with the performing elements of the loan?

Mr. Paul Stanley

We look at it on the basis of individual circumstances. I am just saying what would have happened in certain circumstances and it is less likely that they would have been broken out historically.

Does Ulster Bank Ireland go to the extent of separating out the bad loans if that is possible? Does Ulster Bank Ireland sell them on and allow the-----

Mr. Paul Stanley

Historically, we have not done so to any extensive extent.

So Ulster Bank Ireland just sold them on.

Mr. Paul Stanley

The package of the loans of the customer was sold on.

Would Ulster Bank Ireland not try to unravel that package?

Mr. Paul Stanley

Ultimately, the net result is that there is a non-performing loan position there.

Yes, but Ulster Bank Ireland could separate out the performing elements of that and allow the customer to work with the bank on those and then sell on the other parts of that.

Mr. Paul Stanley

In that instance, the buyer would have an interest in having the whole relationship.

So Ulster Bank Ireland is packaging the loans in an overall non-performing loan to suit the vulture funds.

Mr. Paul Stanley

The vast bulk of the loans have been entirely non-performing but I am saying that there are instances where there would have been some in the packages.

Yes, but Ulster Bank Ireland is packaging them for the vultures.

Mr. Paul Stanley

Ultimately, the customer is still in a net position of arrears in terms of his or her overall liability to the bank irrespective of one loan being performing.

I understand that but these are exceptional circumstances where Ulster Bank Ireland is about to sell loans, some of which are performing, and I am asking that in that instance, why not structure it in such a way that Ulster Bank Ireland allows the customer the chance of continuing on in the performing elements of his or her loan?

Mr. Paul Stanley

That is not strictly what we have done, most of these we are talking about are buy to let categories.

I know they are buy to let categories but at the same time, there are families involved here and that is what I am thinking of. That is the difference between Ulster Bank Ireland and I. I am trying to establish what lengths Ulster Bank Ireland goes to in order to facilitate a family in a buy to let or in a private house to stay in that house.

Mr. Paul Stanley

In the case of a principal dwelling home, PDH, type mortgage, we go to extremes. Again, I am going to those extremes in the latest perimeter of loans that we are looking at to keep people in their homes.

These figures would not suggest that. They are significant figures.

Mr. Paul Stanley

They are significant figures but it is reflective of what has happened in the economy and what has unfortunately happened to both home buyers and to buy to let properties.

It is also reflective of bad banking.

Mr. Paul Stanley

It is reflective of banking decisions and it is-----

Bad banking.

Mr. Paul Stanley

-----reflective of customer outcomes as well.

Ulster Bank Ireland will not even call it the way it is. That is where my concern is with all this.

Mr. Paul Stanley

I would accept that it is reflective of bad credit decisions on behalf of banks in exceptional economic circumstances that had seen property values drop by 55%.

No, the crash came first before the economy went down and Ulster Bank Ireland's bad banking decisions came before it turned down.

Mr. Paul Stanley

Yes, but I am talking about the credit decisions.

I would argue that the banks caused it.

Mr. Paul Stanley

I am saying that the credit decisions that were made in these instances did not foresee property values falling by 55%.

They were careless and bad banking decisions.

Mr. Paul Stanley

Nobody saw property values falling by 55%.

They were careless and bad banking decisions.

Mr. Paul Stanley

We will differ on that.

On the sale of the loans and the future sales the witnesses will talk about, if there was an ethical fund, not a vulture fund but a not-for-profit organisation that was willing to engage with the bank to have those bad loans or mortgages transferred to it to keep people in their homes, would Ulster Bank Ireland exercise a preference to deal with those rather than with the vulture funds?

Ms Jane Howard

Yes, if somebody was to come forward with something we would consider it.

Would Ulster Bank Ireland throw them into competition with the vulture funds or would it say that the bank has a corporate social responsibility here and therefore decide to work with that particular fund because it is not-for-profit organisation and place it before its consideration of a vulture fund?

Ms Jane Howard

Without the specifics it is hard to speculate on exactly what we would do but I am keen-----

They are specifics. The vulture will just take the whole loan for profit. It does not give a damn about regulation or anything else. The manner in which some of the vulture funds' agents are treating the people in this country is shocking and we are told constantly in these Houses and in this committee that the protection follows. It does not. They are a ruthless bunch who want nothing out of the Irish economy only profit and they do not care what sort of situation they leave behind, whether it is people in desperation or a devastated society. They do not care. What I am saying to Ms Howard is that is quite different from someone coming forward to Ulster Bank Ireland, asking if the bank cares about them and to help them transfer their loans to a charity that is not for profit. Is it possible that within the change of culture in the banks, that the banks would accept that things went wrong and that there is a need for a change of culture and to signal that the banks would work with the not-for-profit organisations if they came forward?

Ms Jane Howard

If a not-for-profit organisation came forward we would be delighted to look at it.

I want to touch on some of the other issues raised. On trackers, Ulster Bank Ireland says it has come to the end of that and it is dealing with it. Ulster Bank Ireland is confident that part of the history of the bank is almost over in terms of the solutions for customers and the payment of redress and so on.

Ms Jane Howard

I apologised personally to the customers who were caused distress and I will do so again. Ulster Bank Ireland carried out a thorough process to make sure it included all customers and as I said earlier, we believe we have everybody in scope who should be in scope and we do not anticipate any further groups coming to light.

What are the prospects for Ulster Bank Ireland? Does Ms Howard see it putting all this behind it, competing in the market and offering various other products and services?

Ms Jane Howard

If the Chairman looks at what the team has delivered, it was a modest profit last year but there were some good underlying trends there.

What was the profit last year?

Ms Jane Howard

Some €15 million. As Mr. Coyle articulated earlier, we have helped more customers buy a home, we are saving them money when they switch to us and we are keen to do more of that when we have the best rates and we are keen to work to make sure the switching process from one bank to another is easier than it is at the moment.

Equally, on the business side there are customers who want to borrow and who are expanding. We are keen to help them also. We are demonstrating growth in that area and we have a good momentum into this year.

We are continuing to invest in digital. There is no doubt that we have some customers who only want to do their banking digitally. We need to be able to offer a solution that is as good as Revolut or something similar. We do not think that is enough, however, and we believe it is right to offer a bank that is digital and physical, which is in line with our strategy. We have a good, sound strategy and we are delivering against it.

On the European Central Bank and banking in general, Ulster Bank Ireland obviously keeps an eye on what goes on in Europe in the context of banking regulation. Do our guests see new European regulation coming in and being layered over domestic regulation? Do they see any difference in approach on the part of the European Central Bank or the policymakers in Europe to do things differently or to impose new regulations? Has Ms Howard seen that develop?

Ms Jane Howard

We have seen some regulations come out. Obviously, they relate to the prudential side. One of the regulations relates to the need for retaining more capital in respect of non-performing loans and, as we discussed earlier, the averages and the desire to get banks to below 5% of non-performing loans because that percentage is seen as being high. Undoubtedly, we will continue to see new regulation coming out, particularly as one gets new developments. It could come out on the conduct side, which would be from the Central Bank, or it could come out from the EU. As technologies develop and as we see things such as artificial intelligence being used in robotics there will need to be new regulation to ensure that consumers are protected.

Are restructured loans being sold?

Ms Jane Howard

If we restructure a loan for a customer and transfer the customer to a sustainable solution, which means he or she can cover the debt, then we would keep that loan, absolutely. It remains at non-performing loan status for up to two years but we retain it. That is exactly what we are trying to do; to help customers to restructure - where we can - to remain in the home with a debt that he or she can afford to pay.

Who pays the piper when an ATM is stolen? Who is at the loss when an ATM is stolen from a bank or a supermarket and there is money in it? The ATM provides the facility to all the banks so is there a joint payment in these cases or is it the individual bank?

Mr. Ciarán Coyle

Where an ATM is stolen from a bank, it is a cost that the bank in question has to cover. It is a criminal offence and an investigation takes place. When the ATM is within a retail outlet, it can depend on whether it is branded to a certain bank. In those circumstances, there is potential to share the costs. I will have to check the position for the Senator. There would also be non-banks that are in the ATM market. We have seen in recent weeks where it has happened and where the bank involved is ultimately going to be liable for the costs and must manage the risks around that. This is one of the reasons we discussed earlier for having to cover some of the costs associated with banking in general but with ATMs in particular.

Ms Jane Howard

There are some insurances in place but clearly the more this happens then the less that is going to happen.

I thank our guests for attending.

The joint committee adjourned at 12.35 p.m. until 1.30 p.m. on Tuesday, 21 May 2019.