Ulster Bank’s rumoured exit and its implications - East Coast FM

Image audioImage Ulster Bank’s rumoured exit and its implications - East Coast FM

With the rumoured exit of Ulster Bank from the Irish banking market, our Head of Communications at bonkers.ie, Daragh Cassidy spoke on East Coast FM to discuss any potential change and what it might mean for consumers.

Here’s an outline of the main points discussed by Daragh in the interview.

What is happening with Ulster Bank?

In recent years Ulster Bank has struggled to make a profit in the Republic of Ireland and there are rumours that the bank wants to focus more on its core market, which is the UK. 

Ulster Bank has lost patience with the Irish market. As a result of Covid-19, the bank has gone back into a loss, as have a lot of the Irish banks. Permanent TSB is also struggling with profitability. 

Even before Covid-19, there were question marks about how smaller banks would survive in a low-interest rate environment.

If Ulster Bank does leave the market, it wouldn’t be overnight. It would take 5-7 years for it to come to a conclusion and customers will be given advanced notice on what they can and should do. 

Depending on the product people have, they’ll have various options open to them. If it’s a current account, savings account or a mortgage, it’s likely to be slightly different as to what people should do. 

Take a look at our blog post where we answer the most important questions about what Ulster Bank's closure means for customers.

Review of operations

Ulster Bank had previously reviewed its operations here in 2014. The bank looked at various options, one of which was leaving the market. 

Another option was selling some of it to a private equity firm, and a third option was tying up with a bank. PTSB has often been rumoured as the bank that Ulster Bank could merge with.

Ulster Bank has been selling off problem loans and mortgages and has been downsizing slightly by closing a few branches. As well, at the moment Ulster Bank is going through a new redundancy programme and around 300 people are being laid off.

It feels like Ulster Bank has been gradually trying to exit the Irish market undercover for the past few years. 

What this means for the banking industry 

Consumers have lost patience with some of the banks, but ultimately this won’t be good news because the banking sector here needs more competition. 

Ulster Bank and KBC have been very good at reducing mortgage interest rates over the past few years. 

Mortgage interest rates are still far too high in Ireland but it’s really been Ulster Bank and KBC that have been leading the competition, and then Bank of Ireland and AIB having to slowly follow as a result of what they’ve done. If Ulster Bank exits, it may put further upward pressure on banking fees, and mortgage rates.

Ulster Bank is still committed to Northern Ireland. A few years ago Ulster Bank changed its structure and separated the service in Northern Ireland and the service in the Republic of Ireland.

Switch to digital

The banking sector is going through huge change at the moment, particularly with the likes of Revolut and N26 dominating the marketplace. 

Interestingly, Irish banks have been hugely resistant to change. It seems as though over the past 2-3 years, technological developments have really sped up. 

There are younger consumers out there who have never stepped foot into a bank branch, who have absolutely no need for what we might consider to be a normal current account. They may be more than happy to do all of their everyday banking through Revolut or N26 and this trend is likely to continue in the coming years.

Consumers need more choice and more options, the banking sector here is heavily concentrated in the hands of AIB and BOI. 

Even though Ulster Bank is smaller than those two banks, it still had a large presence. The backing of Ulster Bank’s British parents meant that it could pump more money into the bank and offer services such as Google Pay and Apple Pay. These are simple services that Irish banks have been slow to offer because they don’t have the funding.

Compare banking options 

Are you surprised at Ulster Bank’s decision to leave the Irish market? Let us know your thoughts in the comments!

Since this interview, it has emerged that KBC is also considering exiting the Irish market.

If you’re with Ulster Bank or KBC and are looking for a new current account option, you can use our current account comparison service.

Our service quickly and easily compares different current account features and charges from all of Ireland’s main banks. 

Before making the switch, you might want to take a look at our guide on how to switch current accounts for more information. 

We also recently wrote a piece on who is offering the best value current accounts in 2021, making it easier to evaluate your options.

We’d be happy to answer any questions you may have about Ulster Bank’s rumoured exit. Get in touch with us on Facebook, Twitter and Instagram.