OVERCHARGING:THE NEW management team at Anglo Irish Bank has uncovered customer overcharging at the bank that could cost the State-owned bank a further €50 million.

Following a complaint from a corporate customer last February, Anglo discovered that the bank had applied incorrect interest rates on loans.

The bank has launched an investigation led by chief risk officer Peter Rossiter. Old files between 1999 and 2004 on its Irish, UK and US loan books will be examined to determine how many customers have been affected, and the sums of money overcharged.

“It is difficult to say how many customers are affected,” said Anglo chief executive Mike Aynsley. “We expect that it is going to involve a cost of around €30 million to €50 million.”

The bank was investigating whether incorrect rates were applied deliberately, how the issue arose, and who was responsible.

Mr Aynsley said the incorrect rates involved differences of 0.03 to 0.05 percentage points between the rate stated on loan documents and the rate applied.

After investigating the complaint from the customer, Anglo discovered similar instances where the rate applying to certain loans did not accord with the bank’s loan documentation. The bank’s initial review has shown that the practice ceased in 2004.

Mr Aynsley said the bank had informed the Financial Regulator and the Department of Finance when the overcharging was discovered, and that the regulator was being briefed regularly.

The bank said it would inform all corporate customers affected and “ensure that redress, where appropriate, takes place”.

Anglo said the potential liability to the bank was “up to €30 million” excluding any compensation that may be due to overcharged borrowers. This also excludes any loans outstanding before 1999 or any amounts that may be offset against amounts due but unpaid by the affected borrowers.