The opposition has called for a forum to be established to set out a vision for the banking sector after KBC Bank’s “worrying” announcement 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.
On Friday, 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.
Labour’s finance spokesman Ged Nash said the minister 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”.
With @AskKBCIreland withdrawing from the Irish banking market @geraldnash has called on the Minister for Finance to convene a Forum on Banking and consider how we deliver a third banking force https://t.co/Tsoop5tkbL pic.twitter.com/ElafYCPKQ7
— The Labour Party (@labour) April 16, 2021
Mr Nash said: “KBC 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 highest in the Eurozone, the Irish banking sector requires urgent policy attention from the government.
“This decision represents bad news for KBC’s customers and for ordinary people everywhere. It will make an extremely difficult mortgages market even more impossible, particularly for those starting out.
“It’s time now that the Central Bank stops being commentators in ivory towers and take 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.”
He added that it had been a “traumatic” two months for bank staff in Ireland with the withdrawal of Ulster Bank and Bank of Ireland’s series of branch closures, and that it was important that jobs are retained.
Today’s announcement by KBC is bad news for staff, customers & consumers.
Any purchase by BoI must include entire loan book, providing security to borrowers. Those who fell into arrears during a pandemic or before cannot have loans sold-off to vulture funds! – @PearseDoherty pic.twitter.com/8BzB9yx6XT
— Sinn Féin (@sinnfeinireland) April 16, 2021
Sinn Fein’s Pearse Doherty also 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 called on Bank of Ireland to clarify if it instigated this development, and for any transaction to protect the jobs of KBC staff and the well-being of KBC customers and borrowers.
“Coming not even two months after Ulster Bank’s announced exit from the market, this is another blow to consumers, customers and KBC staff,” he said.
“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.
He added: “I am alarmed to learn that KBC’s non-performing loan portfolio is not part of its MoU with Bank of Ireland, risking these loans being sold to vulture funds.
“Many of these loans may have become non-performing as a result of the pandemic’s impact on the borrowers, through no fault of their own.”