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Ireland’s AIB fined €83mn over tracker mortgage scandal

Ireland’s central bank has fined AIB, the country’s second-largest lender, €83.3 million for not allowing customers access to cheap mortgage interest rates in a scandal dating back more than a decade.

AIB’s fine was dwarfed by the €38m Ulster Bank fine last year for excessive mortgage costs after tens of thousands of Irish customers at major banks were refused loans whose rates followed those of the European Central Bank.

AIB had reserved €70 million for a fine.

The tracker mortgage scandal has further tarnished the reputation of Irish banks, which had to be bailed out during the financial crisis. Tracker mortgages became unprofitable for Irish banks after ECB interest rates fell close to zero at the end of 2011.

As a result, Irish banks switched 40,000 customers to more expensive interest rates, including fixed or floating rate loans. The central bank launched an investigation in 2015.

The AIB sanction brings the amount of 174 million euros to the amount that banks have been fined for the failure of tracker mortgages, the central bank said in a statement. The lenders themselves have paid 737 million euros to customers in reparation and compensation.

Ireland’s largest lender, Bank of Ireland, has yet to be fined following AIB’s sanction.

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