KBC exiting Ireland

namloc1980

The housing market at all levels in Ireland is dysfunctional.

The Mortgage market is all over the place with lenders pulling out, much of which is driven by the inability to enforce on collateral where people can go years without paying with little consequence, while politicians cheer from the sidelines. This leaves us with high interest rates relative to other EU states with a shrinking competitive landscape.

Construction costs are extremely high and even basic 3-bed semi-d housing costs half million plus in and around Dublin

Social Housing is equally all over the place also as successive Irish governments left it to the "market" to provide social housing stock which has resulted in a serious lack of social housing and housing lists years long in local authorities across the country.

And the rental market is out of control. Even last year during Covid rents went up and now stand at ridiculous levels.

In a functioning market if someone couldn't afford their mortgage they would be accommodated by the private rental market or in social housing. As no level of the Irish housing market works as it should, it suits the government to have a hostile legal environment for repossessions to protect social housing and the private rental market from even more demand pressure.

Jim2007

Peterd66 wrote: »

Another bank driven out by Central Bank policy and approach and a warning to any new lenders thinking about entering the market.

This just is not even close to reality! The entire banking sector across Europe is in crisis. The level of competition over the past 10 years or so has turned the sector into a commodity industry and we're now on a race to the bottom. It does not matter if you're a bricks and mortar or digital bank, none of them are making serious money and many reporting losses.


The consolidation and retrenchment we are beginning to see is the result of over competition initiated and supported by management with a 12 month horizon. You can't give away product for free while at the same time competing on cost to the point that your gutting the heart of the business over the long haul, but so long as it does not fall over your watch, it's all good... Except in the long run the clients and the taxpayer ends up carrying the can.



The biggest barrier to foreign banks entering the Irish market are the banks shareholders. Shareholders have no appetite for foreign retail banking because it has been a lose making exercise everywhere it has been tried not just Ireland. So if you are a board member and you want to get reelected, the last thing you do is recommend your bank enters a loss making business.

Craig_David

How will this announcement impact new business going forward I wonder?
Like some others who commented, I also have an AIP to switch my mortgage to KBC.
Will they continue to lend?

MarkR

Good link for current customers.

What should KBC customers do now?

Jim2007

sebdavis wrote: »

I have everything with them, including a fixed mortgage. If they are leaving does that mean the fixed contract is broken and I can move to anyone else? they want me to pay 2k to break it

No.

They've 1,000 employees in Ireland, any word on what their situation is?

timmyntc

Jim2007 wrote: »

This just is not even close to reality! The entire banking sector across Europe is in crisis. The level of competition over the past 10 years or so has turned the sector into a commodity industry and we're now on a race to the bottom. It does not matter if you're a bricks and mortar or digital bank, none of them are making serious money and many reporting losses.


The consolidation and retrenchment we are beginning to see is the result of over competition initiated and supported by management with a 12 month horizon. You can't give away product for free while at the same time competing on cost to the point that your gutting the heart of the business over the long haul, but so long as it does not fall over your watch, it's all good... Except in the long run the clients and the taxpayer ends up carrying the can.



The biggest barrier to foreign banks entering the Irish market are the banks shareholders. Shareholders have no appetite for foreign retail banking because it has been a lose making exercise everywhere it has been tried not just Ireland. So if you are a board member and you want to get reelected, the last thing you do is recommend your bank enters a loss making business.

The big barrier to foreign banks entering the Irish market is that the market is not profitable. Repossessions are so difficult in Ireland and take an average of 3 years in court to settle (eye watering legal fees when you have this happening for every case).

Bobeagleburger

MarkR wrote: »

Good link for current customers.

What should KBC customers do now?

Saying it could take years, if it happens.

10000maniacs

Did you hear the joke about the country where you can take out a mortgage and if you fail to make your payments, you can still keep your house?

Henry Ford III

Deleted User wrote: »

They've 1,000 employees in Ireland, any word on what their situation is?

No but they'll be dusting off their cv's I suspect.

Foreigndad

Jim2007 wrote: »

This just is not even close to reality! The entire banking sector across Europe is in crisis. The level of competition over the past 10 years or so has turned the sector into a commodity industry and we're now on a race to the bottom. It does not matter if you're a bricks and mortar or digital bank, none of them are making serious money and many reporting losses.


The consolidation and retrenchment we are beginning to see is the result of over competition initiated and supported by management with a 12 month horizon. You can't give away product for free while at the same time competing on cost to the point that your gutting the heart of the business over the long haul, but so long as it does not fall over your watch, it's all good... Except in the long run the clients and the taxpayer ends up carrying the can.



The biggest barrier to foreign banks entering the Irish market are the banks shareholders. Shareholders have no appetite for foreign retail banking because it has been a lose making exercise everywhere it has been tried not just Ireland. So if you are a board member and you want to get reelected, the last thing you do is recommend your bank enters a loss making business.

You are partly right and partly wrong. I work for the ECB with bank regulation so this is my bread and butter.

Irish banks need to hold the third highest level of capital for a mortgage in the EU behind Romania and another country (might be Greece?). This is due to both higher default rates and higher losses on the mortgages once they have defaulted. A Scandinavian bank for example can give out about three mortgages for the same amount of capital as an Irish bank need to hold for a same size mortgage. Holding capital is the largest cost for almost all banks.

Irish banks have below EU profitability on top of that leaving less wiggle room to be aggressive. Banks are not what they used to be in terms of profitability, but there are plenty of profitable banks still making good marigins on mortgages with interest rates well below 2%. Check the bank SBAB in Sweden for example, they only do property lending (retail mortgages and residential developments), nothing else and have rates below 1.5%, highly profitable and have been for most of the last 15 years. There are other good stuff examples in Benelux, Germany, the Nordics etc. Just took SBAB since they only do residential property.

TempAc

Deleted User wrote: »

They've 1,000 employees in Ireland, any word on what their situation is?

Nothing confirmed but likely along what would be expected, some of the staff will be transferred over to the purchasers of various parts of the business with redundancy for others.

Likely all branches will just disappear with no transfers of employees. For context n26 claim to have over 200k customer accounts with no branches and no support staff based here. The old human intensive current account banking systems are over.

10000maniacs

mcsean2163 wrote: »

KBC leaving because the housing market is broken.

In 2017 nonperforming arrears over 2 years was 5% in the major banks. That's a lot. Unpopular but something probably needs to be done.

Government could go in, buy the subprime, repossess the houses but leave the families in them so they become social housing.

https://www.irishtimes.com/business/financial-services/arizona-firm-to-buy-irish-subprime-loans-at-75-discount-1.4536367?mode=amp

75% discount....

You know, that's our money you would be pissing away if that scheme was implemented. 75% discount. FFS.

AndrewJRenko

flazio wrote: »

Is there anything to be said for another Credit Union?

There's a good bunch of credit unions providing current accounts at very low cost. If KBC start charging fees for current accounts, I'll be heading to my CU.

Jim2007

Supercell wrote: »

So looks like N26 is the place to go, they dont do joint accounts though their N26 Smart account offers an extra card for a one off fee which pretty much accomplishes that. I wonder if you can go to the "smart" account, get the extra card and then downgrade to the free account? Nothing in the smart account makes me want to fork out €4.90 a month for it at all.

There is not right place to go... pretty much all the digital banks are loosing money just as fast as the bricks and mortar ones and we're at the beginning of likely phase of consolidation and retrenchment.


It's a toss up who will be left standing when the dust settles.

The J Stands for Jay

Here's a list of some of the banks I've had accounts with:

Halifax Ireland
Nationwide UK Ireland
Rabobank
Ango Irish Bank
KBC
Ulster Bank

Can anyone see a pattern?

Dr Bob

Deleted User wrote: »

Ironically KBC is choc full of ex BOI staff who took sweet voluntary parting packages for an equally sweet new job with KBC - I wonder how the staff in general are feeling this morning- there’s very few bank jobs out there at those sort of salaries now.

I worked there for 12-13 years (back when they were still IIB bank)
Even then (I left pre expansion) there were a lot of people in head office , (in support /admin and all the background stuff)hopefully theres a decent redundancy package and work out there for them

Amirani

10000maniacs wrote: »

You know, that's our money you would be pissing away if that scheme was implemented. 75% discount. FFS.

It wouldn't be popular either. It would be construed as some sort of "land grab" by the State, taking people's homes (that they don't pay for) and turning them into social housing. Plenty of people would be up in arms about it, so it would be a lose on the economic side and a lose on the political side. Might be a win socially, but that would get drowned out and people would argue otherwise.

fryup

namloc1980 wrote: »

The housing market at all levels in Ireland is dysfunctional.

The Mortgage market is all over the place with lenders pulling out, much of which is driven by the inability to enforce on collateral where people can go years without paying with little consequence, while politicians cheer from the sidelines.

well, those on the far left - SF

maybe that's why they left? nervous that those marxist anarchists will get into power??

esp with the Strokestown fiasco fresh in their minds

Bob24

6 wrote: »

Saying it could take years, if it happens.

Yeah I agree with that, there is no panic for current customer and no reason to move any account for now.

Having said that, even if it takes a while the closer they get to a deal the less of an incentive KBC will have to attract/retain customers (possibly even the opposite; they might want to get rid of customers who don’t add value when negotiating with another bank to take over their business). This means that even if they are not leaving just yet, they might stop their free banking offers and become less competitive in terms of mortgage and savings rates.

Gael23

JTMan wrote: »

KBC said that BoI would purchase "liabilities". Deposits are liabilities at the bank level.

That said, KBC did not clearly call out deposits and BoI do not need more deposits. The opposite in fact.

I would guess that deposits will be returned but it is not clear.

What do you mean by returned?

Wanderer78

fryup wrote: »

well, those on the far left - SF

maybe that's why they left? can't stomach the idea of having to deal with those marxist anarchists in power??

esp with the Strokestown fiasco fresh in their minds

as apposed to the free market ones!

listermint

McGaggs wrote: »

Here's a list of some of the banks I've had accounts with:

Halifax Ireland
Nationwide UK Ireland
Rabobank
Ango Irish Bank
KBC
Ulster Bank

Can anyone see a pattern?

Yeah the chase for Free Fee's isnt sustainable and people jumping all their current accounts to the next fad business talking about free fees cant work. It costs alot of money to keep your current account for a bank. They have to make it back from somewhere. People dont seem to think about that ever.

Sam W

I’m thinking to transfer my KBC account to EBS. I know many people said it’s ****e in terms of online banking / contactless before. Is it still the same? Do they have online standing orders / online money transfers? Any catch for zero maintenance fees?

Jim2007

berocca2016 wrote: »

And where are the client assets held? In an EU bank. Bye Felicia

Yes but in whose name are the assets held? Do you have an actual account at the holding bank which clearly identifies your deposits from everyone else?


I've read several of these types of agreement over the past while and I'm always left wondering if it were to go pear shaped how it would pan out before the courts... particularly since in most cases it would be under civil law not common law.

McGaggs

McGaggs wrote: »

Here's a list of some of the banks I've had accounts with:

Halifax Ireland
Nationwide UK Ireland
Rabobank
Ango Irish Bank
KBC
Ulster Bank

Can anyone see a pattern?

You're a jinx

The J Stands for Jay

Jim2007 wrote: »

There is not right place to go... pretty much all the digital banks are loosing money just as fast as the bricks and mortar ones and we're at the beginning of likely phase of consolidation and retrenchment.


It's a toss up who will be left standing when the dust settles.

It is logical to switch to the cheapest bank that meets your requirements. Let the tides of consolidation lead you where they may, changing banks whenever circumstances demand. Your costs of banking on the future is a problem for the future.

GazzaL

What are EBS like?

10000maniacs

Fred Cryton wrote: »

You would think our politicians might implement reforms on that point. But getting people out of houses, even if they're not paying for them, is just political suicide in Ireland. Expect absolutely nothing to be done on that point.

Sinn Fein got the most votes of any party on the manifesto of everyone being entitled to a roof over their head. This type of socialism only works if you have the economy of scale of the bigger countries like Britain, France or Germany.
Once the shinners get into power, they will soon find out that the money tree in the back garden does not exist.
And that it's the hard pressed middle, i.e. the ones that are actually paying their mortgages are the ones who are also supplying all that money to the money tree.

The J Stands for Jay

[Deleted User] wrote: »

You're a jinx

I've also had accounts with AIB and PTSB.