Thousands of people will see their mortgages, deposits, credit cards and pensions move from KBC Bank to Bank of Ireland.
Many questions arise from the impending €8bn transfer. Here, we attempt to answer some of them.
Q: What is happening?
A: The competition watchdog, the Competition and Consumer Protection Commission, has cleared the multi-billion euro sale of KBC Bank mortgages, deposits, credit cards and pensions to Bank of Ireland.
The deal still has yet to receive ministerial approval, but that is likely to be given.
The Indo Daily: Don't bank on it: Everything you need to know about switching from Ulster and KBC banks
If you are a mortgage customer, you do not need to do anything as your mortgage will simply transfer to Bank of Ireland.
If your KBC mortgage was non-performing, it will already have been transferred to the ownership of Carval, and the mortgage is being serviced by Pepper. You should have been informed of this already.
Q: What does this mean for my mortgage?
A: Your terms and conditions, interest rate and monthly repayments will remain the same. If you are on a tracker, you will keep your tracker on the same terms as it is at the moment. So if your tracker is set at 1pc over the European Central Bank rate, Bank of Ireland has to abide by that.
Q: What happens when my KBC fixed-rate mortgage term ends?
A: Bank of Ireland has agreed to offer former KBC customers the same interest-rate options as KBC would when you come to the end of it. That is important, as KBC’s rates for its existing customers are much lower than Bank of Ireland’s rates.
However, it only applies to the first time you come to the end of a fixed rate with Bank of Ireland.
KBC mortgage customers who currently enjoy a 0.2pc discount, because they took out a KBC current account with their mortgage, will keep that discount. There is no requirement to open a Bank of Ireland current account.
In addition, Bank of Ireland has also committed to not increasing the KBC variable rates – which KBC customers would roll to once they come off a fixed rate – by any more than the increase in the Bank of Ireland variable rate.
For example, if European Central Bank rate increases are applied in the future, they would be applied equally to both Bank of Ireland customers on a variable and KBC customers.
KBC variable rates are between 3.2pc and 3.5pc, depending on your loan to value.
Bank of Ireland variable rate is between 3.9pc and 4.8pc.
Bank of Ireland said: “So if a KBC customer rolls off their fixed rate (on their first roll-over, post-migration), they will have the option of taking up a lower variable rate than the standard Bank of Ireland variable rate, even after a 10-year fixed period.”
Q: Can I switch?
A: If you decide you do not want Bank of Ireland to take over the running of your mortgage, you are free to switch to another lender.
There are still good value rates to be had from the likes of Avant Money, ICS Mortgage and Finance Ireland. If you are still in a fixed rate, you make have to pay a break fee. And switching involves the cost of hiring a solicitor for conveyancing.
Q: Should I switch to another lender?
A: KBC mortgage holders have been advised to consider switching to another lender before their mortgages are acquired by Bank of Ireland.
Consumer advocate Brendan Burgess has claimed Bank of Ireland’s “very high rates for existing customers” and its practice of charging existing customers more than new customers will result in a huge increase in mortgage repayments for KBC customers when the mortgages move to Bank of Ireland.
“They should wake up and begin the process immediately of switching to another lender – Avant and Finance Ireland have the best long-term and medium-term fixed rates,” he said.
Q: I am in the process of applying for a KBC mortgage. What happens now?
A: KBC is still accepting new mortgage applications until July 15. If you are granted a KBC mortgage, it will likely end up being transferred to Bank of Ireland.
Q: When will the bank close?
A: The Belgian-owned bank had initially said it was giving its customers three months to close their accounts, from the time the bank starts writing to customers in June. After pressure on the Central Bank to “get its finger out” and regulate the situation in a more intrusive way, KBC Bank did a U-turn and told its 130,000 customers they would have six months from the time they get a letter to close their accounts.
The letters will go out in batches over the course of this year and into 2023, the bank said.
It plans to continue to provide reminders to customers during this period, through a combination of letters, emails and text messages. Note that there is no need to wait until you get your letter.
Check out the alternative current account providers on the Competition and Consumer Protection Commission’s website, ccpc.ie.
As part of its planned exit, KBC said that from July 15, it will no longer be accepting new applications for all products, including current accounts, mortgages, deposits, loans, home, car and life insurance and personal credit cards.
In addition, KBC will no longer be accepting new applications for business banking products.
Q: Will I get charged fees during the current account switch?
A: You will need to have your new account up and running before you can close your old one. For those who bank online, you should be able to do this via your web-banking app.
KBC has said it will not penalise you for having two current accounts open at the same time. It said that once it issues notice on your account, it will stop charging maintenance fees.
Q: When KBC deposit accounts transfer, what rates will apply?
A: Customers will earn the same amount of interest with Bank of Ireland as they did with KBC, Bank of Ireland said.
Q: When KBC credit card accounts transfer, will the same rates and credit limits apply?
A: The credit card interest rates will remain the same for customers included in the transfer, with the exception of instalment plans, where Bank of Ireland will charge a lower interest rate.
There will be no change to credit card credit limits for customers, Bank of Ireland said.
Q: If former KBC customers apply for a credit card, how long before they get one?
A: KBC credit card customers being moved to Bank of Ireland do not need to go through an application process. For those KBC customers who do not have a KBC credit card or Ulster Bank customers, the process is different.
Existing Bank of Ireland customers’ applications can be approved within about 24 hours and new customers normally within 72 hours, Bank of Ireland said. This is assuming you get approved.
But it warned that these timelines assume that the bank is in receipt of all relevant additional information and documentation needed to complete the application. Cards take around five working days to arrive once the account is opened.
Q: If someone from KBC is opening a Bank of Ireland current account, how long before they get an overdraft, and will they get the same max overdraft amount?
A: Once their current account is opened, Bank of Ireland said they can apply for an overdraft, with turnaround time of two to three days.
In relation to the overdraft amount, each application is individually assessed and subject to a full credit and affordability assessment. Depending on your circumstances, you may be offered a higher or lower amount, Bank of Ireland said.
Q: What happens if I don’t close my account?
A: KBC Bank accounts will automatically close after six months.
If there are funds left in accounts once the deadline has passed, it will write to customers advising them how the funds can be accessed.
Q: What happens to my KBC savings account?
A: The sale of KBC mortgages and deposit accounts to Bank of Ireland has been cleared by competition regulators. This means the savings accounts will automatically transfer to Bank of Ireland. You will not have to do anything.
If you want to close your account and move the deposits elsewhere, you must write to KBC Bank informing it of this. Should your account be transferred to Bank of Ireland, be warned that it may update your terms and conditions.
Q: There are still some questions not answered for me. How do I contact the bank?
A: KBC Bank says that if you have any specific questions, you should contact it on freephone 1800 93 92 44.
