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Irish Independent
Irish Independent
Jon Ihle

KBC welcomes ministerial approval for transfer of mortgages

KBC Bank is one of two banks leaving the Irish market. Photograph: Aidan Crawley

KBC mortgage and deposit customers will start moving to Bank of Ireland early next year after a deal between the two banks was approved by finance minister Paschal Donohoe, KBC said.

KBC Group welcomed the approval to migrate “substantially all of its performing loan assets and liabilities” to its rival, part of an exit plan that will see the Belgian bank abandon the Irish market in 2023.

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

The change will affect tens of thousands of KBC Bank Ireland customers and substantially strengthen Bank of Ireland’s position in the market, as the mortgages will deliver increased income in a rising rate environment.

The transaction was already given the green light by the Competition and Consumer Protection Commission (CCPC) in May of this year and was awaiting final sign-off by Mr Donohoe before it could proceed.

The CCPC has told Bank of Ireland it must provide €1bn in funding to non-bank rivals as part of a competition remedy to offset its increased share of the mortgage market.

Since May non-bank mortgage lenders Finance Ireland, Dilosk and Avant have either withdrawn from segments of the market or increased their prices relative to banks due to higher wholesale funding costs.

The three remaining domestic Irish banks, by contrast, are funding their lending from abundant low-cost deposits, which now earn a margin when held in the European Central Bank’s (ECB) deposit facility, due to increased rates since July.

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

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

“I am confident that together with Bank of Ireland Group, our customers will be provided with a good home, whilst 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 beset by confusion and delays this year.

Most customers of the two departing banks had not yet closed their accounts as of last month even as thousands were being threatened with frozen funds and cancelled transactions.

Just 38pc of the current and deposit accounts that were open with the two departing banks at the beginning of the year had been shut by the end of October, according to data published by the Central Bank three weeks ago.

Although AIB, Bank of Ireland and Permanent TSB have opened 800,000 new accounts in the year to date – twice the typical number – there are nearly as many customers as that who haven’t migrated or closed yet.

The massive overhang and protracted migration process is threatening to delay the banks’ planned exits from the Irish market and has become a contentious issue with the Central Bank.

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