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KBC accounts to move to Bank of Ireland by end-2022

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A pedestrian passes a KBC Bank branch, operated by KBC Groep NV, in Dublin, Ireland, on Friday, Dec. 28, 2012. Ireland will take over the EU presidency in January as the euro-area wrestles with putting the European Central Bank in charge of lenders within the currency union and other participating nations. Photographer: Aidan Crawley/Bloomberg

A pedestrian passes a KBC Bank branch, operated by KBC Groep NV, in Dublin, Ireland, on Friday, Dec. 28, 2012. Ireland will take over the EU presidency in January as the euro-area wrestles with putting the European Central Bank in charge of lenders within the currency union and other participating nations. Photographer: Aidan Crawley/Bloomberg

A pedestrian passes a KBC Bank branch, operated by KBC Groep NV, in Dublin, Ireland, on Friday, Dec. 28, 2012. Ireland will take over the EU presidency in January as the euro-area wrestles with putting the European Central Bank in charge of lenders within the currency union and other participating nations. Photographer: Aidan Crawley/Bloomberg

KBC Bank customers’ are likely to see their mortgage shift to Bank of Ireland in late 2022 with the process to be completed by December next year.

Aleš Blažek, chief executive of the Belgian banking group’s Irish arm, told an Oireachtas committee the transfer should happen in the fourth quarter of 2022, pending the expected conclusion of Competition and Consumer Protection Commission probe in the first half of next year.

Mortgage borrowers will be given at least 60 days’ notice before the transfer takes place, but KBC current accounts holders will have to make the switch themselves, if they wish.

All account holders will have to download and register with the Bank of Ireland app themselves.

KBC - which confirmed in October that it will sell its €8.8bn performing mortgage book and hand €4.4bn in deposits to Bank of Ireland - said it would not complete its market exit until it had resolved all of the tracker mortgage cases outstanding at the courts.

“Any exit will be carried out in an orderly and responsible manner, fully respecting all our obligations,” Mr Blažek told TDs and senators on Wednesday.

“We will not leave until we settle all of the obligations related to tracker mortgages which we have. We will abide by all of our obligations. We are going to fulfil our obligations to the last bit.”

KBC was handed a record €18m fine last year for what the Central Bank of Ireland said were “serious failings” to 3,741 tracker mortgage customers, including “significant overcharging” and the repossession of 66 properties.

Mr Blažek, who took up the CEO position earlier this year, said the scandal was a “very regrettable event” and apologised again for the bank’s actions.

He told the Oireachtas joint finance committee that the bank would settle its 27 outstanding tracker mortgage cases in the courts before fully exiting the market.

“Our exit from the Irish market will not be considered complete until we do right by each of them,” he said.

The bank has already corrected the accounts of around 3,785 customers, according to chief risk officer, Barry D’Arcy.

Mr Blažek warned TDs that other banks are unlikely to enter the market here in its wake.

KBC had “quite substantial challenges” making profits in Ireland due to high capital requirements, the small size of the market and a global trend away from retail banks towards fintech firms.

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“It is driven by number of factors. It is the competition in the Irish market. It is also some of the aspects of the higher capital requirements for assets which we have to hold in Ireland. But also it is, as I mentioned, a function of structural changes which are taking place in other markets and in Ireland as well.”

Mr Blažek insisted that customers in Ireland have an “abundance of choice” due to fintech apps and other non-bank products.

KBC also inked a deal this summer to sell its roughly €1.1bn of non-performing Irish loans to US-headquartered fund, CarVal Investors.

Mr Blažek said he had "no reason to believe that more generally the customers would be in any worse position than they are” with KBC.

Meanwhile, the Financial Services Union (FSU) has hit back at comments Mr Blažek made saying he preferred directly engaging with bank staff rather than through unions, the Workplace Relations Commission (WRC) and the Labour Court.

“If the present system were so beneficial to staff, hundreds of KBC staff would not have joined the FSU,” said FSU general secretary John O’Connell.

“KBC have refused to attend both the WRC and the Labour Court in the past. I hope that the new CEO will live up to his word that staff wellbeing and representation is important and agree to attend the Labour Court if requested to do so.”

The bank’s parent, KBC Group, reported a €601m profit for the third quarter of this year, including a €319m loss in its Irish arm due to the Bank of Ireland sale.

The loss includes a one-off impairment charge of €170m and €81m in staff costs, the group said in a statement on its third-quarter results, as well as a one-off loss of €13m related to the tracker mortgage review.

The Group expects to claw back around €200m of its Irish losses once the Bank of Ireland deals close.


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