Danske Bank Q&A
Q I am a customer of Danske Bank, what will happen to my account?
If you have personal banking or are a small-to-medium-sized business with a current account, you need to start thinking about moving.
Nothing will happen straight away, but the plan is to quit the market in the first half of next year. Customers will be contacted by the bank over the coming weeks to be told what to expect.
Ultimately, you are going to need a new bank.
However, one move under way could see Danske do a deal with an Irish bank to ease the transition – but experience when other lenders have left is that the loss of overdraft facilities has been a real blow to some customers.
Q I have a loan with Danske, what will I do?
If you have a loan, you will have to keep repaying it. Just like other banks that have shut or left Ireland, it makes no difference in terms of what borrowers owe.
There will be no new lending, but the bank's mortgages and other loans will gradually be "wound down", which just means managed until they are paid off.
There are some suggestions parts of the loan book could be sold, again we've seen this already with the likes of GE's mortgages and the impact on customers is small.
Q I am not a customer of Danske Bank, is there any reason I should care?
Yes. We all know that since the crash there has been a sharp reduction in the amount of credit in the Irish economy, but there has also been a huge drop in the number of banks.
Anglo Irish Bank was eventually shut down, as was Irish Nationwide Building Society. EBS has been "merged" into AIB, Bank of Scotland (Ireland) pulled out, then ACC Bank and now Danske.
Fewer banks means less competition, and ultimately it's likely to lead to higher prices for loans and higher bank charges.
Q Are banks pulling out because of the new bank levy introduced in the Budget?
No. Funnily enough, that levy is based on the amount of deposits banks have here. Even though ACC Bank is shutting down, its parent Rabobank is keeping its main deposit-taking bank, Rabodirect, open. Danske Bank will still deal with corporate customers that provide a lot of its deposits.
Q Is it one-way traffic? Are no new banks interested in coming in here?
A new lender that doesn't have to squeeze customers to help recoup the cost of its past mistakes would be a welcome break for Irish consumers and businesses.
The one exception to the trend for banks to leave that we have seen so far is South Africa-owned Investec.
It has gradually been building its presence here over the past few years, first opening a business branch, then buying NCB Stockbrokers, and it will soon start offering mortgages.