Irish Central Bank identifies 13,600 more overcharged mortgage customers

(Adds KBC Ireland and AIB find additional cases)

DUBLIN, Dec (Shanghai: 600875.SS - news) 20 (Reuters) - Ireland (Other OTC: IRLD - news) 's main banks have accepted that they will have to compensate another 13,600 mortgage customers they overcharged, the Central Bank said on Wednesday, bringing the total of affected borrowers to 33,700.

Irish banks are under threat of being penalised by the government if they do not speed redress for the growing number of borrowers who should have paid less on their mortgages.

The industry-wide compensation scheme concerns customers who should have been given the option of a cheaper "tracker" mortgage that follows the low European Central Bank rate or kept on a better rate years ago.

"Many lenders publicly state that they put customers first. The evidence of the examination that we have seen suggests otherwise," Central Bank Governor Philip Lane said in a statement.

It said 297 million euros ($352 million) had been paid in redress by mid-December. The majority of customers identified in an earlier Central Bank report in October have been compensated, it added.

The bank said the 13,600 cases included 5,800 customers formally reported as verified by lenders.

Bank of Ireland (EUREX: 1269463.EX - news) in November said it had made provisions for an additional 6,000 customers after the Central Bank identified them as having been impacted. But the Central Bank declined to say if all of the 5,800 were Bank of Ireland customers.

The remaining 7,800 have yet to be verified by lenders for inclusion in redress and compensation schemes, the Central Bank said.

The 33,700 cases include 7,100 resolved before the central bank opened its probe in 2015.

KBC Bank Ireland said it was setting aside an additional provision of 61.5 million euros, to be made in the fourth quarter of 2017. It said it had earlier anticipated up to 600 additional accounts would be impacted, but found 2,557.

Allied Irish Banks (Berlin: 30544177.BE - news) said it would pay redress and compensation to an additional 900 customers who were no longer on a tracker rate and would offer additional 1,615 euros to each of 4,000 customers who were denied the opportunity to take out a tracker mortgage. ($1 = 0.8442 euros) (Reporting by Conor Humphries, editing by Louise Heavens and David Evans)