Will Ulster bank do deals or make a huge loss on Offset Flexible Tracker Mortgages.

Another thing that just occurred to me was the non-performing section of the Offset Mortgage book. Normally these would get sold off to some external vulture fund or loan collection agency. But the whole offset aspect might prevent that from happening as well, as I assume that any vulture fund would need to support that capability. Ulster Bank might need to retain these.

This offset thing could be a right pain in the ass for Ulster Bank.

When do you see this happening?

Yeah, but they have to engage with customers and if there's any action that is encumbent on the customers to take, they need to be given a reasonable timeframe. They are going about this the right way with the likes of savings and current accounts, where they have communicated clearly and early with customers and given them plenty of notice. At some point it is fair enough for Ulster to close those accounts, regardless if the customer has made alternative arragements elsewhere.

However with mortgages, Ulster bank can't just decide to wrap things up on their terms unilaterally ignoring any contractural obligations just because they are "in liquidation" (and voluntary liquidation at that). Unless Ulster Bank want to write them off (hah! as if!) those mortgages will need to be situated with another party. They can't just rage quit without sorting that first, regardless how troublesome it is for them. Consumers have rights.

I should correct one error in my original post. I am referring to an OFFSET mortgage.

In an effort to be less vague, let me give you some facts. I have more money in the savings than in the mortgage account. On two occassions in the recent past I have been phoned by the bank and told that I must remove money from the savings account because it is not allowed to have a balance greater than is due on the mortgage. I asked them why, because as far I was aware this was allowed and I was not in violation of any of the T&C. I asked them specifically to state which rule I was in violation of, and they could or would not, except to repeat that I couldn't have more in the savings half. I asked them to send me a letter saying precisely what the problem was. Strangely enough, no letter was forthcoming... and I still have more money in savings than is owed on the mortgage.

Therefore, I asked on this forum whether other people have also been phoned about this, in order to understand if this was some general strategy that UB is employing, or whether I got contacted by a particularly keen minion. I also maintain that I find this slightly threatening behaviour, to cold call me about money in my account, and insist I do something without justification, all because they want to resolve a problem they have with mortgages they can't shift.

Yes I have read the T&C and to the best of my knowledge, Yes I am in compliance with them.

I requested that UB send me a letter if I am not in compliance, and they have not done so.

On the other hand, on the phone (and not in writing) they were trying to get me to reduce the balance in my savings account.

That is a very good point, and it had occurred to me. I am in the process of moving the excess savings elsewhere and intend to leave one euro more in the savings account than in the mortgage account. The reason for this is to give me the option of a cheaper loan in the future, should I need it, as I can 'borrow' from the savings account and pay interest at mortgage rates.

However, I am worried about the status of these tied accounts in the future when UB will have no physical presence here and will have closed all other accounts (apart from the 5000 or so Offsert mortgage accounts still on their books, that seem to be going nowhere.) According to the FAQ on their website "please note there is no action for you to take on your Offset Mortgage and linked accounts if they are still meeting your needs".

You commented previously (https://www.boards.ie/discussion/comment/120125505#Comment_120125505 ) "Ulster Bank is being wound down and that means that it will go into liquidation at some point and anything that remains will be come part of that process. That means the debt will crystallise and the liquidator will be free to deal with them as he sees fit." How will this actually develop? Is there a worst-case scenario whereby they could appropriate my savings because they are 'in liquidation', yet my mortgage debt has been sold to another bank and I'm still liable for the debt?

Having accounts with a bank in financial limbo is perhaps not a smart move, yet we have been given no advice beyond "please note there is no action for you to take".

A colleague of mine visited with Ulster bank recently. He asked was there an update with regarding the offset mortgage. The staff member he spoke to also has an offset mortgage and he was told that talks are underway with AIB and it looks like they are going to take them. Anyone else here anything about this?

Hi, I'm only catching up the chat trail now.

I've been trying to get an update on my off-set tracker mortgage from UB contacts but no one seems to have any clarity on what is happening with them currently. Based on all the recent correspondence I've got from UB I've contacted them, the CCPC and Central Bank to get clarity on my rights as a consumer given UB intention to leave the market. My concerns as some of you have called out before....

1. Got a new T&C's booklet from UB regarding my Mortgage and Current Accounts with UB..... UB 'claim' there are no real changes to our T&C's but I'd disagree with this...
2. They call out that I won't have access/ability to make any lodgment or withdrawal form my current account once all the branches are closed in late April. I asked CCPC and Central Bank if above is not a breach of my original facility i.e. no ability to make lodgements on the account. Whilst they don't get involved in the particulars they claim I've no choice but to accept these terms.
3. I asked Central Bank if my current account and saving account are covered under the deposit scheme and assured all okay with this to value of €100,000.
4. I'm getting letter after letter and emails from all utility and other providers asking me to update my bank account details with UB exiting. I've been advising them that my account is staying active which they done seem to accept. I pay the property tax by DD and Revenue said that as far as they are aware no UB DD's/Standing Orders will be available/active later in 2023.

Has anyone got any further update on our entitlements?

Are we expected to open 'current account' with another institution to avail of conventional banking facilities?

Cheers.

I'm not sure if this is related but does anyone have any idea what or when Ulster Bank will do something with unsustainable mortgages in arrears?

It's a good question. Even if these banks were bog standard mortgages there would be a discount involved (I'm pretty sure UB sold their other mortgages below par, might be wrong in that). But I think what would warrant a bigger discount is the following; 

• First and foremost the buying bank would need to build the offsetting capability in order to take over the running of these, if they don't have that capability already (and I'm not aware of any other currently operating bank that offers offsets in Ireland). Might seem like a pretty trivial task from a laypersons perspective. But off the top of my head that would involve changes to various IT systems, updating of product catelogs and documentation, training of staff, legalese updates, possibly updates to websites. Having spent some time working in the IT space in Irish retail banking, they are not known for being "agile". Not a huge project by any means but it's not "nothing" and the buying bank is going to have to spend time and money on this. So that will need to be reflected in the price.
• It's unknown to us what degree people are using the offsetting feature (the buying bank will know it though, it will need to be disclosed to them). But again it's not nothing and that's gonna affect the buying price. On top of that is it is unknown to the buying bank to what degree people are going to use the offsetting feature in the future. More and more people might start realising that the offsetting feature is a good use of any savings. This is more likely to happen I think as people get into the last few years of their mortgage where the mortgage balance has been reduced a lot and they might have more savings to offset against it.
• Also, under the hood, these are trackers, which are less attractive to banks.
• The size of the offset loan book is likely to work against it. Apparently there are only around 4 to 5 thousand of these. A buying bank is gonna weigh up whether it's worth all the hassle and unknowns for a pretty small loan book.

Whether this all translates to a "huge" discount, I don't know. But definitely a bigger discount than a standard transaction.

I've been following this conversation with interest (pun intended). I have an offset with savings in excess of the mortgage balance. As I read the comments it seems Jim has the best grasp of it. As far as I'm concerned, this is a UB problem, not mine.

1. I believe these are loss making to the bank, increasingly so with rising rates. Might be wrong, but the way banks fund mortgage debt on a short term basis, suggests to me that these are somewhat dud products for them. In other markets where offsets are offered, they come with higher interest rates, so if you are only partially offsetting the benefits can be eroded by paying more on the non covered balance. The UB ones are ECB trackers, so the cheapest rates, not the way the product should be.

2. There is clearly a problem for UB, they haven't shifted them and can't close the offset savings and current accounts.

3. I'm ignoring all letters from utilities to whom I have DDs from UB. It is not in my interest to make UB's problem any less by ceasing them. UB sold me an offset tracker, that requires a current account to work as an offset. I'm entitled to assume my current account will operate until I'm told otherwise.

3. They can't just transfer the mortgage. Unlike other bundled mortgages which had terms and conditions allowing them be sold, my offset mortgage has an implied current account and savings account linked to it. If they sold to AIB, they have to also open a savings and current account for me with AIB, I'd have to go through KYC process with AIB, and I believe I'd need to consent. Unlike moving my debt, I'm not sure they can move my savings unilaterally. I don't think they can legally force me to do my current account banking with AIB, just because they want it to take over the offsets.

4. I also hold in excess of the mortgage balance. One user seems certain he has been threatened that he needed to reduce the savings/current balance to the outstanding mortgage sum. I'm not aware of any such rule, had no such calls, and have not heard of any other offset holder getting them. Not doubting the original poster, but it sounds like a misunderstanding. He certainly adopted the right approach, "tell me exactly what rule I'm breaching".

5. I hadn't considered the risk for me of holding more than €100k in UB, or holding more than the mortgage balance. I don't think it's a credible risk. But I will probably reduce it down close to the balance, on the basis that it'll be harder logistically to move in future, not because there's any real danger of the funds being grabbed by a liquidator.

6. The point about the banking licence is an interesting one, a real pain if UB have to retain an operating clearing bank just to service the current accounts of offset holders.

7. It'd be logical for UB to analyse the offset accounts, target any that fully cover the mortgage, and offer say a 20% discount. Clear the mortgage at 80% value and return the savings and close the CA. Would make a lot of sense, but it's time consuming. They will be selling these at a steep discount anyway, as these products are a nuisance, but they're unlikely to do deals individually. They'd rather take a 30% discount and sell as a bundle.

8. Would also make sense for UB to look at the other partially covered ones, calculate roughly what they saved in interest historically, project this forward, and make an offer of compensation to close the account and for the mortgage holder to refinance elsewhere on normal terms.

9. I don't think UB will have the resources or head-space to negotiate individual deals to close the accounts, but if they properly resourced a knowledgeble team, came up with a suitable package, they could hugely reduce the number of problem offsets very quickly.

10. If UB do try to bulldoze through a solution which unfairly trods on offset holder's legal rights, we should reconvene back here and potentially assemble a group willing to challenge them on it.

Thanks to all who've contributed on this thread, there is scant information out there on the issue, and it's interesting to find others in the same situation.