KBC exiting Ireland

sebdavis · 17-04-2021 10:32AM

1st On wrote: »

Overall, this is not surprise. As a few posters have said KBC is a commercial entity and their only goal is to make profits. We are in a period of low interest rates on all products, so there is a worldwide squeeze on profitability so they are making less (and will continue to do so in the foreseeable), so they will focus on the most profitable markets they can. Realistically Ireland dysfunctional market just isn’t one of these for numerous reasons.
Profits are massively squeezed, the lethargy of the Irish public in moving away from the big two banks is stark, they are offering higher rates yet still dominate new lending, so KBC will continue to struggle to develop sufficient market concentration to change their current position.
The historical business is still such a big element of their book. (pre 2015 say) still accounts for probably 70-80% of KBC’s book, and this is a massive drag on their profits. The 13-14% NPL rate they have 10-15 years after the crash is astounding. The tracker book was 40% of their book from a report from a few yrs ago (can’t open link here so open to correction on that figure) so that earning only 1% is a huge drag also. Irish customers are paying a hefty cost for the banks chronically mispricing their lending for years and given the length a mortgage this is still in effect today and will be for the next 10 yrs probably.
Capital levels are high, and justifiably so. Capital is set against risk, and we have a proven track record of being risky. We have a volatile economy, now massively dependent on Foreign direct investment, and there is a large risk there in terms of economic outlook with the pressure on the corporate tax regime. The for unsecured nature of the mortgage market has been well commented on. And is another key driver.
We are a tiny market, so there just is. It the diversification in lending needed. Some EU countries use mortgage lending to develop customer business and then generate large fee income from other products (insurance, current accounts, set up fees etc.) this just isn’t part of the Irish business model so other growth sources are scarce.

Overall, I I was over KBC I’d be taking the same actions.

DO you realise how big KBC bank are in Europe?

lawred2 · 17-04-2021 10:44AM

jester77 wrote: »

Don't think you can have both a personal and a business account in parallel, unless they changed their rules recently.

Hmmm maybe... I'll check. Was able to with Revolut. But you could be right.

Darc19 · 17-04-2021 10:45AM

sebdavis wrote: »

DO you realise how big KBC bank are in Europe?

I think the poster does know that.

He (or she

) summed it up perfectly.

Ireland is a small market, even with Ulster gone, KBC will not get past being #4.

The REAL money is in the secondary products - insurance, pensions, business banking etc

Media love headlines such as Denmark have 0% mortgages. But they don't tell you that there are 3 parts to a Danish mortgage. The admin fee is usually 1% - 1.25% and then you also have to have insurance. Still cheaper than rates here, but about the same as the trackers many have.

KBC similar to Ulster saw that they were always going to be in the also rans here and with Bank of Ireland making them an offer, they made the correct business decision to get to a stage where a deal is in the offing.

If I were head of KBC like the poster, I'd make the same decision too.

Slutmonkey57b · 17-04-2021 10:48AM

Rewired wrote: »

May not have to. The link posted a few pages back says BOI's new platform will be based on T24, which is what KBC uses.

As anyone with experience of BOI will tell you, if there's a way of ****ing that up, BOI will manage it.

Taylor365 · 17-04-2021 12:02PM

Looks like my best option for current account is N26. I do all transactions on a credit card, so will probably go with Avant for that.

Alternatively, the least hassle option by the sounds of it regarding transfers/payments is probably EBS for current account.

AndrewJRenko · 17-04-2021 12:31PM

GarIT wrote: »

It's still €48 per year and there is the risk of negative interest not being declared until it has already been charged.

No financial institution can introduce charges such as negative interest without advising customers up front.

JTMan wrote: »

I would doubt that BoI will operate under the KBC brand when KBC continues to operate as a bank elsewhere. Also keeping 2 sets of systems would be a total expensive mess.

Separately, anyone else think EBS might be next? It might make a lot of sense for AIB to merge the EBS and AIB brands and shut the EBS legacy branch network. Difficult to see how the legacy EBS branches that seem to mainly deal with cash transactions can be profitable.

I'm by no means sure that BoI could continue to operate the KBC brand here, but stranger things have happened. Virgin Media here is not part of the Virgin group owned by Branson, they just use his branding here.

BoI also continue to operate the ICS brand for mortgages, with lots of poster advertising at present for their public sector mortgages.

So anything could happen, and the decisions about how to brand for customers are largely independent of the decisions on how to run the back end technology.

sebdavis · 17-04-2021 12:38PM

Slutmonkey57b wrote: »

As anyone with experience of BOI will tell you, if there's a way of ****ing that up, BOI will manage it.

BOI have already f**ked it up, they are 1 billion plus at the moment and heading towards 2 billio to implement

AngeloArgue · 17-04-2021 12:55PM

1st On wrote: »

Overall, this is not surprise. As a few posters have said KBC is a commercial entity and their only goal is to make profits. We are in a period of low interest rates on all products, so there is a worldwide squeeze on profitability so they are making less (and will continue to do so in the foreseeable), so they will focus on the most profitable markets they can. Realistically Ireland dysfunctional market just isn’t one of these for numerous reasons.
Profits are massively squeezed, the lethargy of the Irish public in moving away from the big two banks is stark, they are offering higher rates yet still dominate new lending, so KBC will continue to struggle to develop sufficient market concentration to change their current position.
The historical business is still such a big element of their book. (pre 2015 say) still accounts for probably 70-80% of KBC’s book, and this is a massive drag on their profits. The 13-14% NPL rate they have 10-15 years after the crash is astounding. The tracker book was 40% of their book from a report from a few yrs ago (can’t open link here so open to correction on that figure) so that earning only 1% is a huge drag also. Irish customers are paying a hefty cost for the banks chronically mispricing their lending for years and given the length a mortgage this is still in effect today and will be for the next 10 yrs probably.
Capital levels are high, and justifiably so. Capital is set against risk, and we have a proven track record of being risky. We have a volatile economy, now massively dependent on Foreign direct investment, and there is a large risk there in terms of economic outlook with the pressure on the corporate tax regime. The for unsecured nature of the mortgage market has been well commented on. And is another key driver.
We are a tiny market, so there just is. It the diversification in lending needed. Some EU countries use mortgage lending to develop customer business and then generate large fee income from other products (insurance, current accounts, set up fees etc.) this just isn’t part of the Irish business model so other growth sources are scarce.

Overall, I I was over KBC I’d be taking the same actions.

Agree with your take here.

Especially about the low interest rate environment.

Maybe I can add a couple of points. Banks internationally seem to be consolidating and shrinking down in size. This could be due to the low interest rate environment and quantitive easing measures and money printing which has seen stock markets soaring.

Retail banking outside of mortgages is loss making. Ireland is still suffering the aftereffects from 2008. The Government here through shows of populism and from minor parties dictating policy because of our proportional representation system have interfered onerously in the construction sector and mortgage markets

Slutmonkey57b · 17-04-2021 02:41PM

sebdavis wrote: »

BOI have already f**ked it up, they are 1 billion plus at the moment and heading towards 2 billio to implement

That's assuming they will actually manage it at all.

Yyhhuuu · 17-04-2021 11:20PM

AndrewJRenko wrote: »

No financial institution can introduce charges such as negative interest without advising customers up front.

I'm by no means sure that BoI could continue to operate the KBC brand here, but stranger things have happened. Virgin Media here is not part of the Virgin group owned by Branson, they just use his branding here.

BoI also continue to operate the ICS brand for mortgages, with lots of poster advertising at present for their public sector mortgages.

So anything could happen, and the decisions about how to brand for customers are largely independent of the decisions on how to run the back end technology.

I thought ICS is no longer part of BOI group.

AndrewJRenko · 18-04-2021 12:21AM

Yyhhuuu wrote: »

I thought ICS is no longer part of BOI group.

Apologies, you're correct.

https://www.icsmortgages.ie/about

JTMan · 18-04-2021 07:20AM

Sunday Times have said that KBC's exit will probably be complete much quicker than Ulster's exit. It will not be a case of "years" but rather "months" ...

Unlike Ulster Bank’s protracted and complex departure, KBC’s planned exit could be substantially completed by the end of the year.

pwurple · 18-04-2021 07:54AM

1st On wrote: »

The historical business is still such a big element of their book. (pre 2015 say) still accounts for probably 70-80% of KBC’s book, and this is a massive drag on their profits. The 13-14% NPL rate they have 10-15 years after the crash is astounding. The tracker book was 40% of their book from a report from a few yrs ago (can’t open link here so open to correction on that figure) so that earning only 1% is a huge drag also.

This. And the inability to resolve non performing loans.

Evictions for non-payment takes decades here. Courts are woefully slow. A customer can literally stop paying the mortgage (or rent) , and sit tight in the house for years without eviction.

Our mortgage rates are the highest in Europe, banks should be reeling in profits. Banks should be clamouring to get in and compete, not out. Problem is, those high interest rates hide a dirty secret. The high mortgage interest rates we pay are papering over those non performing loans. Basically, we are all subsiding those who are defaulting.

There is a real national historic hangover from the brits here about eviction, contributing to a completely dysfunctional courts system, banking sector and housing market.

sebdavis · 18-04-2021 09:15AM

pwurple wrote: »

This. And the inability to resolve non performing loans.

Evictions for non-payment takes decades here. Courts are woefully slow. A customer can literally stop paying the mortgage (or rent) , and sit tight in the house for years without eviction.

Our mortgage rates are the highest in Europe, banks should be reeling in profits. Banks should be clamouring to get in and compete, not out. Problem is, those high interest rates hide a dirty secret. The high mortgage interest rates we pay are papering over those non performing loans. Basically, we are all subsiding those who are defaulting.

There is a real national historic hangover from the brits here about eviction, contributing to a completely dysfunctional courts system, banking sector and housing market.

At this stage we need to stop looking back and start looking forward. The rubbish about the Brits for one. Get over it and move on

The more you look into ireland it setup for people who don’t want to pay their way. Time to ask the government to shut this down and do not vote in a party which plans to double down on it.....give people more opportunity not to pay

I’m sick of paying throug the nose because of it

Darc19 · 18-04-2021 09:36AM

JTMan wrote: »

Sunday Times have said that KBC's exit will probably be complete much quicker than Ulster's exit. It will not be a case of "years" but rather "months" ...

Its smaller and leaner and a lot simpler in terms of transaction.

Just 2 parts - Bank of Ireland take over the performing business and the non performing loans are sold to an investment fund. Depositors are told to take their money away and find a new home for it.

They already have these two parts separated, so once due diligence is finished a deal agreed it's a matter of "flicking a switch"

Just 12 hubs - so easy enough to sell these leases on (at a negative key money probably) or to do a deal with the landlord.

I'd be surprised if it didn't mostly conclude by September.

I've 5 years left on a .95 KBC tracker and all it means is that the mortgage payment goes to a different account number and a different name on the headed paper.

howiya · 18-04-2021 09:54AM

sebdavis wrote: »

At this stage we need to stop looking back and start looking forward. The rubbish about the Brits for one. Get over it and move on

The more you look into ireland it setup for people who don’t want to pay their way. Time to ask the government to shut this down and do not vote in a party which plans to double down on it.....give people more opportunity not to pay

I’m sick of paying throug the nose because of it

Turkeys don't vote for Christmas. In a PR system no party would get a sufficient bounce from what you're proposing to get a sufficient majority to enact the necessary changes. If politicians thought it was a vote winner they'd have done it already.

Politicians don't have control over the benefits such a policy would result in either. Its not as simple as evict non payers and the banks will reduce mortgage rates. Look at BOI. They don't even try and compete with the lower rates offered in the market.

Jinglejangle69 · 18-04-2021 10:00AM

When you have the Bríd Smyths and Paul Murphys of the world on the radio everyday pushing a narrative then this is the result.

Eoin O Broin and Richard Boyd Barrett.

This country really is weak.

Hoboo · 18-04-2021 12:03PM

Jinglejangle69 wrote: »

When you have the Bríd Smyths and Paul Murphys of the world on the radio everyday pushing a narrative then this is the result.

Eoin O Broin and Richard Boyd Barrett.

This country really is weak.

Why don't you step up then? This country is full of moaners.

sebdavis · 18-04-2021 12:17PM

Hoboo wrote: »

Why don't you step up then? This country is full of moaners.

The country is also full of people who work, have paying jobs and have spent a huge amount of time to get into that position

Sorry but the “why don’t you do it” is silly, a politician is a career choice, I have mates who since 15 have been out in local community building relationships etc so when they decided to go into politics they had the back ground done

Having a discussion about the issue in ireland is not moaning. It’s a discussion, and how to potentially get it resolved

Politicians get paid to be politicians, we should expect them to help the people, and if people raise an issue not get told to shut up like you are trying to

sebdavis · 18-04-2021 12:20PM

howiya wrote: »

Turkeys don't vote for Christmas. In a PR system no party would get a sufficient bounce from what you're proposing to get a sufficient majority to enact the necessary changes. If politicians thought it was a vote winner they'd have done it already.

Politicians don't have control over the benefits such a policy would result in either. Its not as simple as evict non payers and the banks will reduce mortgage rates. Look at BOI. They don't even try and compete with the lower rates offered in the market.

None of the parties have tried, it seems every election the plan is to run on a campaign of “more freebies”

Personally I would prefer a better plan not based on taking every penny from people working. Proper financial planning for the country

jmayo · 18-04-2021 12:25PM

Darc19 wrote: »

You do know that bank of Ireland have paid back all of what they got in the banking bailout.

There were 4 main culprits in the crisis - Bank of Scotland, Ulster bank, irish nationwide & Anglo Irish bank.

Bank of Scotland introduced uneconomic tracker margins (I'm not complaining, i have one)
Ulster Bank introduced to 100% and 110% mortgage

and Anglo and Irish Nationwide lent to any property investor and developer who asked for money thinking the money tree would never stop.

AIB, BOI, EBS, First active, PTSB had no choice but to follow as otherwise customers would walk. Hence when the bubble burst everyone got caught.

Bank of Ireland took the least risks and have recovered and repaid better that everyone else followed by AIB with PTSB lagging in 3rd.

Between Bank of Scotland and Ulster Bank, the UK taxpayer paid over 16 billion to bail their Irish operations out - and will see very little of that ever coming back.

Bank of Ireland has paid the Irish taxpayer back in full with interest and penalties and AIB will get there someday in the next few years and PTSB might be a little longer

So maybe relook at where you direct your anger (without the SF / PBP / lefty all banks are bastards train of thought)

BOI management will be proud of ya.

Fooks sake one would think we the taxpayers and indeed customers should actually be paying poor old BOI what with your synopsis of the banking crisis.

Remember this ad.

https://www.youtube.com/watch?v=T_URy6gEijg

BOI still needed a bailout of 4.8 billion for all the great work they did in not being another Anglo or Irish Nationwide.

And what about the loans bought by NAMA (i.e. the taxpayers again) from BOI with nominal value of 1.93 billion ?

Yeah AIB will get there someday, maybe after of course they have ridden their customers as per usual. :rolleyes:
Funny that the C&AG’s report from 2019 believed they would never repay the investment of the Irish taxpayer in AIB, and that was before Covid.

It is unlikely that the State will generate a surplus on its investment of €22.2 billion in AIB. At the end of 2018, this investment has cost the State an estimated €9.5 billion, after taking account of the €7.1 billion value of its remaining shareholding in AIB [a valuation that has since fallen to €5.1 billion].

Jinglejangle69 · 18-04-2021 12:42PM

Hoboo wrote: »

Why don't you step up then? This country is full of moaners.

Because my job isn't a politician.

FrankN1 · 18-04-2021 12:52PM

Hopefully someone new enters the market soon to increase competition.

sebdavis · 18-04-2021 01:04PM

FrankN1 wrote: »

Hopefully someone new enters the market soon to increase competition.

Avant have for mortgages and are really low(for ireland)

howiya · 18-04-2021 01:09PM

sebdavis wrote: »

None of the parties have tried, it seems every election the plan is to run on a campaign of “more freebies”

Personally I would prefer a better plan not based on taking every penny from people working. Proper financial planning for the country

I'd be interested in hearing more details of your better plan.

Specifically how would enforcing more evictions result in BOI reducing their mortgage rates.

sebdavis · 18-04-2021 01:24PM

howiya wrote: »

I'd be interested in hearing more details of your better plan.

Specifically how would enforcing more evictions result in BOI reducing their mortgage rates.

When did I say I knew how to force BOI to reduce their rates?

howiya · 18-04-2021 01:30PM

sebdavis wrote: »

When did I say I knew how to force BOI to reduce their rates?

What is it you want the politicians to change then?

Apologies if I misread you but I thought you were of the opinion that politicians should change something so that banks will reduce their mortgage rates.

sebdavis · 18-04-2021 01:34PM

howiya wrote: »

What is it you want the politicians to change then?

Apologies if I misread you but I thought you were of the opinion that politicians should change something so that banks will reduce their mortgage rates.

BOI are a company, they are entitled to charge what they want. I personally do no banking with BOI and if KBC sells to BOI I will review then

What needs to change is the entire system, BoI can’t change that, the ability for people to take out mortgages they can never afford safe in the knowledge they can hang around for years not paying the mortgage.

It was posted earlier in the thread in terms of what other countries have in place, even NI has a better system. So implement that, that should encourage more banks and hopefully reduce rates

If BOI at that stage can still charge higher rates, that’s great for them as a company

howiya · 18-04-2021 01:38PM

sebdavis wrote: »

BOI are a company, they are entitled to charge what they want. I personally do no banking with BOI and if KBC sells to BOI I will review then

What needs to change is the entire system, BoI can’t change that, the ability for people to take out mortgages they can never afford safe in the knowledge they can hang around for years not paying the mortgage.

It was posted earlier in the thread in terms of what other countries have in place, even NI has a better system. So implement that, that should encourage more banks and hopefully reduce rates

If BOI at that stage can still charge higher rates, that’s great for them as a company

That's more or less what I thought your opinion was. As you say BOI can charge what they want. So there's no votes in implementing change.

Pascal or whoever can't run an election saying we're going to enforce evictions for those who won't pay and those who do pay will see lower mortgage rates. Status quo continues.

thomas 123 · 18-04-2021 01:47PM

Jinglejangle69 wrote: »

When you have the Bríd Smyths and Paul Murphys of the world on the radio everyday pushing a narrative then this is the result.

Eoin O Broin and Richard Boyd Barrett.

This country really is weak.

Way to blame... amazing that you managed to blame 4 people who have not been in a position to touch any legislation(aside from the odd committee or dail vote) leading to the economic conditions that made it a tenable business decision for KBC to end its operations in Ireland.

KBC exiting Ireland

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