Indo: KBC May Exit Ireland

Szero

http://www.independent.ie/business/irish/decision-on-whether-kbc-will-exit-the-irish-market-due-on-february-9-35345174.html

Options for KBC for KBC Ireland include:
- Shutting Irish operation.
- Merging with another bank.
- Exit and sell KBC Ireland to another bank or fund.

Decision:
- Decision will be announced on 9 February 2017.
- KBC spokesperson downplayed suggestions that decision has been made to keep KBC Ireland.
- Chief Executive disappointed with "below reference" market share of KBC Ireland.

Yggr of Asgard

Interesting but not unexpected giving that while they are making a profit they can't convince enough people to swap over their day to day banking to them.

Anatom

I'd be cautiously optimistic on this. The language used so far doesn't sound like shut-down talk. Still, we'll know more in four weeks' time I suppose...

AlmightyCushion

A rep from KBC came into the company I work for to talk to people about moving to them. This was about a month ago. Seems odd to do something like that if they plan to shut up shop here.

Anatom

Well, in fairness, the sales guys wouldn't know anything about future plans yet, and indeed nor would any of the staff other than some key management. That's the only way they or any other company contemplating it could swing a serious structural change.

It'll be business as usual until the one big announcement to staff/investors/media, all in the same morning. Hopefully, now that they've turned a corner financially they will be pushing on growthwise.

coylemj

AlmightyCushion wrote: »

A rep from KBC came into the company I work for to talk to people about moving to them. This was about a month ago. Seems odd to do something like that if they plan to shut up shop here.

The sales people want to hang on to their jobs so why wouldn't they be out looking for new business?

newacc2015

In other news, water is wet...

KBC have been talking about leaving the Irish market for pretty much the last 10 years. There is always rumouring of them merging with PTSB or another bank.

IMO it doesn't make financial sense for KBC to leave. It is difficult to repossess in default properties here. But the margins on banking are insane. Irish banks pay among the lowest interest rates to savers and get some of the highest interest rates for mortgages in Europe.

KBC is charging 2.9% variable in Ireland, while in Belgium they are giving 20 year fixed mortgages at 3.15%. Ireland could be a cash cow for KBC if they actually figure out what they are doing. If you call a broker about a mortgage, they will tell you KBC is the cheapest but dont touch them. They don't pass on rate cuts to existing mortgage holders.

KBC Ireland could be a cash cow for KBC if they figure what they want to do

JTMan

Somethings up. What are the options for KBC Ireland?

Merging / acquiring PTSB would require the approval of the Irish government and the fair valuing of all the mortgages on the KBC and PTSB books. There is a lot of crap there. Massive massive exercise. Hugh number of people would have to be involved. Leaks would be inevitable. Its not happening.

Merging / acquiring Ulster Bank would require the approval of the UK government and the fair valuing of all the mortgages on the KBC and Ulster Bank books. There is a lot of crap there. Massive massive exercise. Hugh number of people would have to be involved. Leaks would be inevitable. Also, Ulster Bank have a beyond awful IT system, dealing with that legal system like that would cost an absolute fortune. Its not happening.

Closing KBC Ireland is too big a task. Its far too big. The mortgages would have to be wound down over a very long period of time. It would be a 40 year task. Its not happening.

Selling KBC Ireland. Maybe. But who will buy it? Maybe a hedge fund?

KBC Ireland buying an insurance company. Maybe.

KBC Ireland acting aggressive to win share and scale perhaps via a new online-only offering. Maybe.

listermint

newacc2015 wrote: »

In other news, water is wet...

KBC have been talking about leaving the Irish market for pretty much the last 10 years. There is always rumouring of them merging with PTSB or another bank.

IMO it doesn't make financial sense for KBC to leave. It is difficult to repossess in default properties here. But the margins on banking are insane. Irish banks pay among the lowest interest rates to savers and get some of the highest interest rates for mortgages in Europe.

KBC is charging 2.9% variable in Ireland, while in Belgium they are giving 20 year fixed mortgages at 3.15%. Ireland could be a cash cow for KBC if they actually figure out what they are doing. If you call a broker about a mortgage, they will tell you KBC is the cheapest but dont touch them. They don't pass on rate cuts to existing mortgage holders.

KBC Ireland could be a cash cow for KBC if they figure what they want to do

Are they not giving out the best rates currently for new business?

And what other banks are actively passing on rate cuts to existing customers ?

newacc2015

JTMan wrote: »

Somethings up. What are the options for KBC Ireland?

Merging / acquiring PTSB would require the approval of the Irish government and the fair valuing of all the mortgages on the KBC and PTSB books. There is a lot of crap there. Massive massive exercise. Hugh number of people would have to be involved. Leaks would be inevitable. Its not happening.

Closing KBC Ireland is too big a task. Its far too big. The mortgages would have to be wound down over a very long period of time. It would be a 40 year task. Its not happening.

Selling KBC Ireland. Maybe. But who will buy it? Maybe a hedge fund?

KBC Ireland buying an insurance company. Maybe.

KBC Ireland acting aggressive to win share and scale perhaps via a new online-only offering. Maybe.

Any sizeable M&A needs approval from competition authority. KBC and PTSB are both smalll banks that would get approval with little issue. Is it not that difficult to value a mortgage book. What leaks exactly? And so what about leaks, if they agree to merger leaks will have little impact on the merger

Eh 40 years to close down KBC? There is nothing stopping them closing accounts within a few months and selling off the loan books. Danske has left Ireland basically and it only took them a few years.

KBC is basically an online only bank.

newacc2015

listermint wrote: »

Are they not giving out the best rates currently for new business?

And what other banks are actively passing on rate cuts to existing customers ?

They marginally give the best rates for new mortgages, but they dont pass on rate cuts to existing customers. Where as AIB is marginally more expensive (usually 0.1%) and they actually pass on cuts to existing customers.

So when you phone a broker they will tell you KBC is cheaper now, but AIB might be in a few months if you get a mortgage with AIB

JTMan

newacc2015 wrote: »

Any sizeable M&A needs approval from competition authority. KBC and PTSB are both smalll banks that would get approval with little issue.

Agreed that the competition authority is very unlikely to be a road blocker.

newacc2015 wrote: »

Is it not that difficult to value a mortgage book.

It is difficult especially when you have a large tracker book and a large arrears book.

newacc2015 wrote: »

What leaks exactly? And so what about leaks, if they agree to merger leaks will have little impact on the merger

Point is if a merger or acquisition was in progress, the details would have leaked by now. There have been no leaks, which would indicate that a merger or acquisition is not in progress.

newacc2015 wrote: »

Eh 40 years to close down KBC? There is nothing stopping them closing accounts within a few months and selling off the loan books. Danske has left Ireland basically and it only took them a few years.

If KBC do a fire sale of their loan book they will not get the same return as winding down the assets over a long period of time. The KBC loan book is too big to justify a fire sale.

listermint

newacc2015 wrote: »

They marginally give the best rates for new mortgages, but they dont pass on rate cuts to existing customers. Where as AIB is marginally more expensive (usually 0.1%) and they actually pass on cuts to existing customers.

So when you phone a broker they will tell you KBC is cheaper now, but AIB might be in a few months if you get a mortgage with AIB

Go look at bonkers. Kbc are cheapest by alot more the than .1 probably because they don't do gimmicky cash back nonsense.

The rates are all there. And no I don't see aib giving existing customers anywhere near the cut rates they deserve and they only made the mediocre cuts last year due to political pressure you may recall

newacc2015

JTMan wrote: »

It is difficult especially when you have a large tracker book and a large arrears book.

In a few years when the ECB starts increasing mortgage interest rates, those tracker mortgages in Ireland will make KBC more money than mortgages they fixed at 3.2% in Belgium for 20 years. Buying tracker loan books will make financial sense if you are buying mortgages for the long haul

If KBC was aggressive within 3-4 years all those mortgages could be called in. I have heard KBC is one of the lighter banks, whereas AIB got extremely aggressive last year and got 1200 judgements. BOI and AIB have shown the right banks can deal with customers in arrears.

JTMan wrote: »

Point is if a merger or acquisition was in progress, the details would have leaked by now. There have been no leaks, which would indicate that a merger or acquisition is not in progress.

Except there has been plenty of rumours about it...

http://www.irishtimes.com/business/financial-services/kbc-seen-as-possible-ptsb-white-knight-by-french-broker-1.2706674

http://www.irishtimes.com/business/financial-services/question-mark-around-kbc-bank-ireland-s-future-1.2308504

http://www.thetimes.co.uk/article/kbc-eyes-merger-with-permanent-tsb-nnwmx2lfn

Why would there be leak about it? Massive international mergers have been announced overnight basically.

JTMan wrote: »

If KBC do a fire sale of their loan book they will not get the same return as winding down the assets over a long period of time. The KBC loan book is too big to justify a fire sale.

There is nothing stopping them closing their Irish operations tomorrow and handing the loan book to Capita to manage them for them.

newacc2015

listermint wrote: »

Go look at bonkers. Kbc are cheapest by alot more the than .1 probably because they don't do gimmicky cash back nonsense.

The rates are all there. And no I don't see aib giving existing customers anywhere near the cut rates they deserve and they only made the mediocre cuts last year due to political pressure you may recall

I am looking at LTV of 75% and KBC are cheaper than AIB or Haven by a mere 0.2%. Ulster Bank is the same rate as KBC, hardly the cheapest by a lot. In fact when you get to a LTV greater than 80%, KBC are the same as AIB.

The point I am trying to make is if you get a new mortgage with Haven or AIB tomorrow, when AIB cuts rates in 6 months they pass on the cuts to those existing mortgages holders. KBC does not do the same. AIB is also preparing for an IPO. KBC has no excuse for why they dont pass on cuts.

Trish56

KBC do indeed give gimmicky cash back 2k to switchers and before Christmas to everybody that took out a mortgage.

KBC's standard variable rate is 4.25% versus 3.40% with AIB and Haven, this is a huge difference for all those existing KBC customers who are in negative equity or have had past arrears difficulties and cannot switch so YES KBC penalize their existing customers and give the gimmicky rates to new customers. Also bear in mind to avail of the best rates you have to open a current account with them with certain conditions re lodgments.

listermint wrote: »

Go look at bonkers. Kbc are cheapest by alot more the than .1 probably because they don't do gimmicky cash back nonsense.

The rates are all there. And no I don't see aib giving existing customers anywhere near the cut rates they deserve and they only made the mediocre cuts last year due to political pressure you may recall

Trish56

I doubt if KBC would be opening offices all over the country for the past two years if they were planning on exiting the country. I believe the CEO's comments were taken out of context and think the plan is to expand their services as they now offer current accounts, savings and Home insurance and possibly will consider going into the Life and Pensions business in the future.

Trish56

Trish56 wrote: »

I doubt if KBC would be opening offices all over the country for the past two years if they were planning on exiting the country. I believe the CEO's comments were taken out of context and think the plan is to expand their services as they now offer current accounts, savings and Home insurance and possibly will consider going into the Life and Pensions business in the future.

And the fact that they had a reported net profit of 44M for Q3 2016.
Seems strange they would decide to leave if they are now actually making a profit here.

JTMan

KBC’s Irish staff face nail-biting wait to learn their fate

http://www.irishtimes.com/business/financial-services/kbc-s-irish-staff-face-nail-biting-wait-to-learn-their-fate-1.2930655

KBC staff 'concerned for their jobs' as bank decides on its future in Ireland

http://www.thejournal.ie/kbc-bank-staff-3177404-Jan2017/

Szero

KBC have sold some loans to a third party Cabot. More here.

While it is "an unrelated event", Charlie Weston in the Indo states ...

The move to sell - the first time KBC Ireland has sold loans - has prompted fears about the future of the bank here

who is this

Deutsche Bank's analysis suggests it is unlikely to be an exit.

Belgian-based KBC Group’s €5 billion funding line to its Irish unit is likely to help persuade the group to remain in the Republic as it announces the result of a strategic review in two weeks’ time, according to analysts at Deutsche Bank.

From the article it sounds as though the only reason they've stayed silent is a technicality.