Government urged to onboard new banks to prevent consumers from being ‘taken advantage of’


The government has been urged to make a concerted effort to lure foreign banks to this country to prevent consumer exploitation.

It comes after AIB, the state’s largest mortgage lender, said it was in exclusive talks to buy 40,000 tracker mortgages from Ulster Bank in a €6 billion deal.

The assets of Ulster Bank and KBC Bank Ireland are being bought out by AIB, Bank of Ireland and Permanent TSB, raising fears of huge concentration among the remaining three financial institutions.

Consumers’ Association of Ireland Chair Michael Kilcoyne said the Treasury and IDA Ireland needed to do more to attract foreign banks to this market, especially as we have some of the most expensive mortgages in Europe.

He said there was now a major risk that the enlarged three banks would exploit consumers and limit their savings, credit and mortgage options.

Earlier this week, the Competition and Consumer Protection Commission (CCPC) warned of the impact of the Ulster Bank and KBC exits on broader competition in the banking market.

She commented after approving AIB’s purchase of Ulster Bank’s €4.2bn commercial loan book.

AIB’s move to acquire Ulster Bank’s tracker mortgage book is subject to a final agreement with Ulster’s parent company NatWest and regulatory approval from the CCPC.

The split of Ulster Bank’s assets is likely to result in Permanent TSB acquiring its €7.6 billion non-tracker book, Ulster’s SME lending and 25 branches.

KBC hopes to sell €8bn of mortgages to Bank of Ireland, €4bn of deposits and the credit card accounts.

If all deals are approved, the three remaining banks will be too powerful and will exploit consumers, Mr Kilcoyne said.

“These deals have a huge impact on competition in this market. We know banks should compete with each other, but there is no real competition as we still have some of the most expensive mortgages in Europe,” he said.

Ulster Bank tracker mortgage holders have been advised not to switch lenders before the deal is approved with AIB to acquire them.

Because they lose the valuable trackers if they switch to another provider, according to consumer advocate Brendan Burgess.

He said even if European Central Bank mortgage rates went up three or four times, trackers would still be the cheapest home loans on the market.

Treasury Secretary Paschal Donohoe welcomed the announcement of AIB’s plans to acquire Ulster Bank’s trackers.

He said a successful completion of the transaction would give Ulster Bank customers certainty about the destination of their mortgages.

AIB, in which the state holds a 71 percent stake, was instructed by the government in 2011 to take over what was then the building society EBS.

A Treasury spokesman said the bank review he is conducting will examine why the two banks are pulling out of Ireland and discuss ways to bring others on board.

A “dialogue” event or conference as part of the review was scheduled to take place this week but has been postponed to May 16.

Mr Donohoe recently said it was necessary and timely that there be an assessment of how the banking system can best support the social and economic activities of citizens and businesses.

Meanwhile, KBC Bank Ireland has decided to extend the notice period for closing current accounts from 90 days to six months.

The move brings it in line with Ulster Bank and comes days after the central bank threatened to stop Ulster and KBC from pulling out of the market if their customers weren’t looked after.

KBC will start writing to its customers in June, giving them six months to transfer their business. Government urged to onboard new banks to prevent consumers from being ‘taken advantage of’

Fry Electronics Team

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