Bank smart to make the best of less


Tighter regulation and reduced competition will hit borrowers and investors alike.

Halifax shut its remaning branches on Wednesday and Postbank will begin pulling down the shutters in autumn - marking a retreat by institutions that once promised to break Ireland's banking cartel.

Customers will have to get used to less choice and higher charges, with some risk of being squeezed out of the market, especially those on low pay or living in rural communities. The demise of Postbank contrasts with the development in Britain, where the post office is expanding the bank services - in partnership with Bank of Ireland.

Simon Moynihan of Bonkers.ie, a price comparison website, said: "It makes no sense that an institution bailed out by the Irish taxpayers is running a post office bank in Britain while post offices here are withdrawing general banking services. Postbank's closure is a huge loss, especially in rural areas where people rely on the post office to provide banking services."

The dissapearance of competition has added to the problems of borrowers, who are confronted with a growing list of excuses for denying them a loan. Credit could become even more scare if the Central Bank carries out its threat, announced last week, to limit the amount people can borrow.

Investors face a changed landscape too. Banks and insurance firms are being forced to come up with less risky alternatives following a decade of losses by their flagship-managed funds, which were supposed to provide a safe mix of equities, bonds and property. Reducing risk, though, could leave investors with little more than they would earn on deposit.

We examine the changed world of banking and advise you how to make the best of whats in store.

Less Competition

Halifax and Postbank are unlikely to be the last banks to quit Ireland. "I don't see how some banks can continue operating, [they are] fighting for the same pot of money," said Moynihan. "It looks like we'll be left with only four institutions: Allied Irish Banks, Bank of Ireland, Permanent TSB and Ulster Bank."

Decisions being taken by credit unions this weekend, though, could provide bank consumers with an alternative. They are voting on whether to invest in a new payments network, allowing them to provide electronic funds transfers, bill payments and debit cards. If approved, credit unions would be able to offer bank-style current accounts from the end of 2012, although without overdrafts and cheques.

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