CUSTOMERS face the prospect of higher charges and interest rates on loans after the Government revealed it was going to dramatically shrink the domestic banking sector.
A smaller number of banks will mean fewer branches, and higher interest and charges imposed on customers.
Fewer banks will also mean lower interest rates for depositors, higher loans and credit card charges, a continuing squeeze on variable rate mortgage holders and higher current account fees, analysts said yesterday.
Central Bank Governor Patrick Honohan said the two bank plan was "not an ideal situation".
He conceded he did have concerns, in particular on competition and cost and pricing.
But he said there were other banks operating in the market.
Prof Honohan stressed that the Central Bank had a role in consumer protection and would work with the banks to ensure there was more considered processes for working out distressed mortgages.
And head of financial regulation in the Central Bank, Matthew Elderfield, said consumers should approach banks and agree a deal if they have loans that are in difficulty.
Dolmen Stockbrokers' Oliver Gilvarry said less competition would mean higher costs for consumers.
From a situation where the typical Irish town typically had 10 banks during the boom, it is now likely there will be just three or four banks in each.
Although the State was said to be "over-banked" during the boom, analysts said the situation would now be reversed, with a small number of banks posing a risk of cartel-like price and fee hikes.
EBS is set to disappear by being merged in to AIB. The future of Permanent TSB is now uncertain. Its parent group, Irish Life & Permanent, will raise funds by selling off its life and pensions business, with expectations that Permanent will be sold.
Anglo Irish Bank and Irish Nationwide are being wound down, while in the last 18 months PostBank, First Active, and Halifax/Bank of Scotland (Ireland) have all closed.
This will leave the typical town with just AIB, Bank of Ireland and Ulster Bank.