27th Sep 2006 11:03
Allied Irish Banks PLC27 September 2006 FOR IMMEDIATE RELEASE 27th SEPTEMBER, 2006 AIB COMPLETES FOREIGN EXCHANGE INVESTIGATION PROCESS In 2004 an investigation into foreign exchange charging issues at Allied IrishBanks, p.l.c. ("AIB") (NYSE:AIB) was undertaken under the supervision of theFinancial Regulator. The AIB Board allocated all necessary resources to conducting a thorough andwide ranging follow-up investigation. This included examining the systemsoperated by the Bank and encouraging all staff throughout the organisation tospeak up on issues where they had concerns. It also included a comprehensivereview of products and services with the purpose of identifying any shortcomingsor issues and correcting them appropriately. A range of issues under foreign exchange and other headings were identified.Most of these were dealt with and restitution, where appropriate, has been orwill be made. AIB has dealt with, and will continue to deal with, the FinancialRegulator in this regard. Two major issues were identified later on in the process and required furtherinvestigation. These related to specific instances of the application ofincorrect margins or overcharging on foreign exchange transactions in the early1990s and other instances related to interest overcharging which arose in thelate 1980s (see notes to editors). The investigation into foreign exchange and interest charges was independentlyreviewed by Mr. Maurice O'Connell, former Governor of the Central Bank ofIreland. Regular reports on progress were made to the AIB Board and the processwas actively monitored by the Financial Regulator throughout. The investigation of these two issues has now been completed to the satisfactionof the AIB Board and the Financial Regulator. The question of disciplinary action was considered by AIB Management. In viewof the lack of evidence, due principally to the passage of time, it wasconcluded that disciplinary action could not be initiated against any member ofstaff. In relation to all of the above matters, the payment of restitution tocustomers, where it has been possible to identify them, has been or will bemade. This amounts to €11m (see notes to editors). Where identification hasnot been possible it has been agreed with the Financial Regulator that a paymentof €20.6m will be made to charity (see notes to editors). AIB is well advancedin the identification of suitable recipients for charitable funds in areasincluding educational disadvantage and research into how a growing immigrantpopulation can be integrated into Irish society. These payments are in addition to the €34.2m arising as a result of the 2004investigation. AIB Chief Executive Eugene Sheehy said:- "The Bank is satisfied that the investigations have now been completed.However, the failings which they identified are deeply regrettable and Iapologise for them on my own behalf and on behalf of the Board. The Board andManagement of AIB are committed to complying with the principles and standardsset down by the Financial Regulator. I can assure our customers that we have learned valuable lessons and have takencomprehensive action to prevent any of these issues arising again. We have putin place, and are continuing to put in place, new systems and procedures toensure that our customers receive the levels of transparency and service whichthey are fully entitled to expect at all times." -ENDS- For further information please contact:Catherine Burke Alan KellyHead of Corporate Relations Head of Group Investor RelationsAIB Group AIB GroupBankcentre BankcentreDublin 4 Dublin 4Tel: +353-1-6413894 Tel: +353-1-6412162 Notes to Editors Note 1 - Payments to Customers Payment Protection Insurance • 4.6mEarly terminations of lease contracts • 1.4mAffinity Schemes applied inconsistently • 1.0mStamp Duty on ATM/Laser Cards collected incorrectly • 0.7mApplication of incorrect interest charges - Tramore/Waterford • 0.6m (Note 2)Other charging errors (29 in total) • 2.7m • 11.0m Note 2 - Application of incorrect interest charges in branches in Tramore andO'Connell St., Waterford - €0.2m (€0.6m to include interest) - Refunds totalling €0.6m will be made to approximately 600 identifiedcustomers (to include interest of €0.4m to compensate for the passage of time) - Interest charges applied in the late 1980's were in excess of thosenotified to customers - Following an investigation of the branch network, the Bank found noevidence of a wider incidence of the application of incorrect interest chargesas identified in Tramore/Waterford. Note 3 - Payments to Charitable Causes - €20.6m (i) Foreign Exchange Transactions • 17.8m (Note 4)(ii) Miscellaneous overcharges arising where customers cannot be identified or refunds remain unclaimed • 2.2m(iii) Interest on 2004 FX deposit with the Central Bank of Ireland • 0.6m • 20.6m - This payment will be in addition to corporate giving which the bankwould in any event be making in 2006 - This payment is in accordance with the principles outlined by theFinancial Regulator whereby the Bank will not benefit from the incorrectapplication of charges even where affected customers cannot be identified - This payment is in addition to the previously announced €10mcontribution to the Community Foundation for Ireland. This represented theunpaid balance of the foreign exchange element of the €34.2m arising from the2004 investigation where customers could not be identified or refunds remainedunclaimed Note 4 - Foreign Exchange transactions - €10.5m (€17.8m to include interest) - Incorrect margins were applied in various situations resulting inforeign exchange charges in some cases being in excess of those notified to theCentral Bank - Records do not enable the identification of customers affected bythese issues and so a payment of €17.8m, to include interest of €7.3m tocompensate for the passage of time, will be made to charity - Affected transactions were in the period pre-1995 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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