Wednesday 26 April 2017

Belgian bank KBC confirms 'long term commitment' to Ireland

KBC Ireland chief executive Wim Verbraeken
KBC Ireland chief executive Wim Verbraeken
Donal O'Donovan

Donal O'Donovan

KBC Group has said it will look at buying an Irish bank or insurance businesses, and has immediate plans to start lending to small businesses.

The Belgian-owned bank confirmed its "long term commitment" to Ireland yesterday, following a lengthy strategic review.

The news was a relief to 1,000 Irish staff, on tenterhooks for months as the group mulled options that included a possible sale of the businesses here.

The Irish unit will become part of KBC's "core" bank division, following the decision.

The Irish unit reported a net profit of €227m for the year, up from €75m in 2015.

A return to profit since 2015 was among the factors keeping KBC here, along with the wider economic recovery and favourable demographics, KBC Ireland ceo Wim Verbraeken told the Irish Independent.

KBC will now target higher growth here, he said.

"The core market classification implies a commitment to a greater level of relevance (in the Irish market)," he said.

As well as the existing retail business, KBC will now start lending to smaller or micro-SMEs, he said.

In the longer term, KBC Ireland plans to develop as a bank-insurance business, similar to the model at its Belgian parent, he said.

"That is not for today - we have a good relationship with Irish Life and Zurich (whose products are sold through KBC Ireland), but bank insurance is the bank's DNA," Mr Verbraeken said.

Expansion in retail banking and insurance may include acquisitions, he said.

"There are no live deals on the banking or insurance side. The intention is to look at opportunities should they arise," he said.

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Ulster Bank and Permanent TSB have long been tipped as potential tie-up partners for KBC Ireland.

A merger would add scale to the business which, with 12pc of the new mortgage market, is dwarfed by AIB and Bank of Ireland.

Buying an insurance business, such as FBD, could help roll out the bank-assure model.

In the meantime, organic growth will be funded from within the Irish business CFO Des McCarthy said.

The bank has already embarked on a €100m multi-year technology investment programme.

After opting to stay in Ireland KBC is now hiring an additional 100 staff in roles ranging from retail and call centre posts to technology.

KBC stressed future growth in relation to the decision to remain in Ireland. But it pumped €1.4bn into the business in the wake of the crash, to cope with loan losses.

An immediate sale that failed to recoup that would have left the bank out of pocket. Retaining the now profitable Irish unit means it can claw that money back over time.

KBC Ireland is among the banks that must identify and compensate customers who wrongly lost cheap tracker mortgages under a process supervised by the Central Bank.

The lender hopes to complete a review of all cases this year, and, in the meantime, is telling borrowers as they are identified under a so-called "stopping the harm" policy, Mr Verbraeken said.

Irish Independent

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