Calls to rescue bank sector as KBC look set to quit market
OPPOSITION TDs have called for a forum to be established to set out a vision for the banking sector after KBC Bank’s ‘worrying’ announcement that it may quit the Irish market.
The potential exit of the bank has been described by the main Opposition parties as another ‘major blow’ to consumers.
And one observer warned that the decision had the potential to hike interest rates and banking fees on mortgage-holders due to the lack of competition remaining in the Irish market.
Yesterday, KBC Bank Ireland announced plans to possibly sell its performing loan book to Bank of Ireland. KBC said the deal, along with a separate sale of its non-performing mortgage loans, would ultimately result in its withdrawal from the market.
Further concerns were fuelled, however, when it was disclosed that KBC’s decision was prompted purely by Bank of Ireland’s surprise offer.
Labour Party finance spokeshighest ‘Need for forum’: Ged Nash man Ged Nash said Finance Minister Paschal Donohoe needs to convene a forum on banking to create a strategic vision for a sector that looks set to comprise a ‘mere three retail banks’.
Mr Nash said: ‘KBC’s plans to sell off their performing loans to Bank of Ireland will serve to strengthen the growing dominance of the Bank of Ireland and AIB duopoly in the Irish market.
‘From a competition and consumer point of view, and in a scenario where mortgage interest rates are the second in the Eurozone, the Irish banking sector requires urgent policy attention from the Government.’
He continued: ‘It’s time now that the Central Bank stops being commentators in ivory towers and takes on some responsibility for setting out a vision for an optimum Irish banking model and how it would better serve an economy and society of our scale and ambition.’
Mr Nash added that it had been a ‘traumatic’ two months for bank staff in the country, with the withdrawal of Ulster Bank and Bank of Ireland’s series of branch closures, and that it was important that jobs be retained.
Sinn Féin TD Pearse Doherty, meanwhile, described the potential withdrawal of KBC as another ‘blow’ to the sector, adding that it only ‘intensifies the need’ for a forum to be established at the earliest opportunity.
The party’s finance spokesman said: ‘Coming not even two months after Ulster Bank’s announced exit from the market, this is another blow to consumers, customers and KBC staff.
‘This move would reduce competition in an already concentrated market even further, risking higher interest rates for consumers and weaker credit availability.
‘Given its impact on KBC staff, customers and the market more broadly, this would be highly inappropriate, and requires immediate clarification from Bank of Ireland and its largest shareholder, the Minister for Finance.’
Daragh Cassidy, of pricecomparison website Bonkers. ie, said the shock announcement ‘has the potential to lead to huge upward pressure on interest rates and banking fees for personal loan customers, mortgage customers and SMEs’.
It emerged yesterday that KBC was not considering pulling out of the Irish market before the approach from Bank of Ireland.
It is understood that it was only afterwards that KBC took the decision to consider the offer to sell off its loan book and exit the market.
‘Another blow to consumers’