With the two banks exiting the market, customers will have some important decisions to make
Ulster Bank’s cautiously released ‘memorandum of understanding’ between its parent, NatWest, and Permanent TSB proposes the sale of certain customer blocks to the Irish bank, currently in majority ownership of the State.
PTSB, to the taxpayer’s relief will be, all going well, buying predominantly with shares rather than tapping us for more cash, but is cherry-picking, not unreasonably, the bits of the business it wants: performing profitable loans – business and domestic – around a third of the branches and up to 500 staff. It has made separate arrangements with AIB as the carve-up continues.
Conspicuous by their absence are tracker mortgages (being hived off to ‘strategic banking counterparties’ which may well be the new cuddly term for vulture funds) and current accounts.
In reality, while this and KBC’s exodus plays out, the real writing on the wall is for deposit holders and ordinary customers who simply want a mechanism to house their salary or pension and pay for stuff.
Nothing will happen quickly. These things take years. Ulster Bank won’t be closing any branches before summer 2022. KBC probably likewise, but as it’s not trying to find a buyer, it could move quicker once it sorts out the logistics of staff, loans and rent contracts.
For tracker customers, who are loss makers to banks, the best advice is not only to sit tight, but do the financial equivalent of lighting a cigar and staring into the horizon until someone comes to fetch you.
Moving your mortgage voluntarily would be madness. You would definitely lose your attractive tracker terms. Finding an owner for your home loan is the bank’s problem, not yours. None of your terms and conditions can be altered as long as you’re paying your way. Nobody wants your business, but you really shouldn’t worry about it.
Deposits are a liability. Any money stuffed into European Central Bank coffers by banks (and there’s far too much of it) is being charged a penalty and being eaten by inflation.
Negative interest rates will, sooner than you think, be passed on to customers directly. At present, only massive accounts (€1m+) are being charged, but Joe Public can expect similar treatment.
Current account holders are being left swinging. Despite hefty fees and charges applying to both maintenance and transactions, their attractiveness to banks lies in the ability to flog you loans, insurance and credit cards. So, while you can expect some ‘courting’, it’s best to decide for yourself.
Daragh Cassidy of Bonkers.ie says: “The proposed deal between Ulster Bank and Permanent TSB around mortgages doesn't include current accounts, nor is it likely to. The same goes for KBC’s proposed deal with Bank of Ireland.
However there may be some type of campaign among the existing providers for the business. This is what happened when Halifax exited the market in 2010 and when Dankse closed its retail operations in 2013 and PTSB tried to actively court the business. Indeed, PTSB has said it would welcome any new Ulster Bank customers and it has recently streamlined its current account opening process – however you will have to do it yourself.
Regardless, both Ulster Bank and KBC must give account holders at least two months’ notice before their account is due to close and nothing is likely to happen before next year.
There are eight providers between banks, credit unions, post offices (see panel) and two digital banks.
The Switching Code of Conduct will ensure smooth transfers within 10 days (your new bank is responsible for providing a switching pack), although you’ll need to tell your employer (or in the case of the self employed, all your clients) your new details.
A cross-over period between closing and opening the new account is a good idea, as is doing it mid month to avoid pay-day and direct debit blips.
“Think carefully about what it is you value in a current account, ” says Mr Cassidy. “Do you simply want the one with the fewest fees, or are things like mobile payments, an app, access to a branch network and reward schemes also important? Do you need an overdraft? Do you regularly withdraw cash or do you prefer paying by card? This will all impact on the account that’s right for you. ”
Neither EBS, Revolut n or N26 allow overdrafts. The former doesn’t have an app at all and its account is basic, while the digital banks have super online options, but you can’t get a loan.
PTSB still doesn’t have Google or FitBit pay and its app isn’t great. Their rewards scheme on the Explore account is very good.
AIB and Bank of Ireland have excellent apps, a large branch network (notwithstanding the ongoing cull across the country), and a person on the other end when you call, as well as contactless options for payments.
Both charge in full, for everything.
Depending on your needs, there are community current account offerings which may suit many people, especially if you prefer a face-to-face branch service.
The ‘Smart’ Account operates just like a bank account in the branches where it is offered.
You will get a debit card operated by Mastercard and an app with Apple, Google or Fitbit pay. An all-important IBAN code facilitates direct debits and online payments. There’s a nice ‘jar’ feature, much like Revolut vaults which lets you put in round-up change to save.
With 950 branches, it’s more extensive than either of the ‘pillar’ banks to get a human being to help.
It is expensive. There’s a €60 per year charge to run it, plus transaction fees (ATM 60c, lodgements 50c etc). See AnPost.ie.
There are over 250 credit unions, 185 of which operate a current account. The account comes with a debit card (Mastercard) and an IBAN code to run direct debit and standing order payments, with Apple, Google and Fitbit pay.
You must be a member, but then you can access loans too, including overdrafts.
The larger ones now have mortgages on offer.
Fees are €4 per month maintenance, there are five free ATM withdrawals per month, with a 50c charge each after that.