KBC welcomes ministerial approval to transfer mortgages

KBC mortgage and deposit customers will switch to Bank of Ireland early next year after Finance Minister Paschal Donohoe approved a deal between the two banks, KBC said.

BC Group welcomed approval to migrate “substantially all of its assets and liabilities from non-performing loans” to its competitor, which is part of an exit plan that sees the Belgian bank exit the Irish market in 2023.

The deal, first agreed between the banks in April 2021, involves the transfer of €9 billion in mortgages and around €5 billion in deposits to the Bank of Ireland.

The change will affect tens of thousands of KBC Bank Ireland customers and will significantly strengthen Bank of Ireland’s position in the market as mortgages will deliver higher yields in an environment of rising interest rates.

The transaction had previously received the go-ahead from the Competition and Consumer Protection Commission (CCPC) in May this year and was awaiting final approval from Mr. Donohoe before proceeding.

The CCPC has told Bank of Ireland it is paying non-bank competitors £1bn as part of an antitrust remedy.

Since May, non-bank mortgage lenders Finance Ireland, Dilosk and Avant have either exited market segments or increased their rates relative to banks due to higher wholesale financing costs.

In contrast, the three remaining domestic Irish banks fund their lending from plentiful low-cost deposits, which now earn a margin when held in the European Central Bank’s (ECB) deposit facility due to the rise in interest rates since July.

Following today’s ministerial approval, KBC Group CEO Johan Thijs said the bank “remains committed to managing this process responsibly in the period ahead”.

“Today’s approval marks an important step in the orderly and gradual withdrawal of the KBC Group from the Irish market,” he said.

“I am confident that, together with Bank of Ireland Group, our clients will be offered a good home while continuing to enjoy the same legal and regulatory protections.”

The migration of current account holders from both KBC and Ulster Bank, which is also withdrawing from the Irish market, has been plagued by confusion and delays this year.

Most customers of the two exiting banks had not closed their accounts over the past month, despite threats of frozen funds and canceled transactions for thousands.

Just 38 percent of current and deposit accounts open at the two exiting banks earlier in the year had been closed by the end of October, according to data released by the central bank three weeks ago.

Although AIB, Bank of Ireland and Permanent TSB opened 800,000 new accounts year to date – double the usual number – there are almost as many customers as those who have not yet migrated or closed.

The massive backlog and lengthy migration process threatens to delay banks’ planned exit from the Irish market and has become a bone of contention at the central bank.

https://www.independent.ie/business/irish/kbc-welcomes-ministerial-approval-for-transfer-of-mortgages-42190448.html KBC welcomes ministerial approval to transfer mortgages

Fry Electronics Team

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