Irish bank loan scandal bill tops half billion euros

Bloomberg

Irish banks paid out over a half a billion euros to customers caught in a mortgage overcharging scandal, according to the nation’s central bank governor.
Lenders handed 580 million euros to affected customers by the end of August, an increase of about 120 million euros since the end of March, central bank Governor Philip Lane was expected to say at a parliamentary committee in Dublin, according to a copy of his opening remarks seen by Bloomberg.
Banks identified about 38,400 affected accounts.
The central bank plans “more intrusive, targeted conduct supervision of those firms that pose the greatest potential harm to consumers,” Lane will tell lawmakers.
The roots of the issue lie with so-called tracker loans, which were closely tied to the European Central Bank’s key rate. Such loans came into vogue before the crash that devastated the Irish economy from 2008. Bank funding costs surged as the financial system teetered on the edge of collapse, meaning such loans became loss-making as the ECB slashed interest rates.
Lane will say four of five main lenders are close to completing the redress and compensation phases, and the central bank is “exerting significant pressure” on the remaining lender to finish its process.