Seán Canney
Question:173. Deputy Seán Canney asked the Minister for Finance the engagement he has had with a bank (details supplied) in relation to the long-term plans; and if he will make a statement on the matter. [41156/20]
View answerTuesday, 8 December 2020
Questions (173, 174, 175)
Seán Canney
Question:174. Deputy Seán Canney asked the Minister for Finance his views on the competitive nature of retail banking; his further views on the impact the closure of a bank (details supplied) would have on banking in Ireland; and if he will make a statement on the matter. [41157/20]
View answerSeán Canney
Question:175. Deputy Seán Canney asked the Minister for Finance if he has considered the impact of the closure of a bank (details supplied) on small businesses, farmers and communities; and if he will make a statement on the matter. [41158/20]
View answerWritten answers
I propose to take Questions Nos. 173, 174 and 175 together.
As the Deputy will be aware, I met with representatives of Ulster Bank on the 21 of October, when I outlined that:
- I expect Ulster Bank to keep all its stakeholders, especially its staff and customers, fully informed about any developments in the review and engage with them in relation to any proposals or decisions that result from the review promptly; and
- I expect that staff, customers and other stakeholders would be informed promptly about any decisions being made
I also emphasised the importance of Ulster Bank to the Irish financial services market, to the wider economy and to the communities it serves. News of the review is, of course, unsettling for all stakeholders, especially the staff and customers.
Ulster Bank confirmed that the strategic review is ongoing and that no decisions have yet been taken. Ulster Bank also confirmed that there is no set timetable for this review and that it is fully aware of the strategically important role that Ulster Bank plays in the provision of financial services to the Irish market.
The continued presence of a viable and active Ulster Bank in the Irish market would be the most welcome outcome. Ulster Bank is a significant employer with 2800 employees and has 88 branches across the country. Ulster Bank is also important in terms of providing competition in the Irish retail banking market.
In the absence of direct knowledge about NatWest’s strategic review of Ulster Bank’s operations, I cannot and will not comment or speculate on possible outcomes as there is no basis for such speculation, which would be open to misinterpretation.
While I will have further engagement with the bank as the review process continues, I would like to emphasise that I have no role in the review or any commercial decisions arising from it. My officials will continue to monitor developments.
As the Deputy may be aware, the responsibility for competition policy rests with the Department of Enterprise, Trade and Employment and the Competition and Consumer Protection Commission (CCPC) is an independent statutory body that is responsible for the enforcement of competition law in Ireland.
The Irish retail banking system is concentrated by international standards, with five retail banks accounting for the majority of new mortgage lending, and three retail banks accounting for the majority of new bank lending to SMEs. However, the wider context is one of improving competition in the provision of financial services, with new entrants to both bank and non-bank lending markets for households and businesses in Ireland already announced. Indeed, it is a welcome development that a new residential mortgage lender has recently entered the market. This will be of benefit to new mortgage borrowers and also to borrowers who may wish to consider switching to a new lender.
Price competition is possible even in a concentrated system. It should be noted that recent trends indicate that rates have been falling. For example, interest rates on new fixed rate mortgages (excluding renegotiations) have fallen from 4.11% in December 2014 to 2.64% in September of this year. There have also been reductions in interest rates on loans to SMEs from 5.19% to 4.33% over the period Q1 2015 to Q2 2020, as well as reductions in interest rates on consumer loans (for example, from 8.3 to 7.54% on APRC consumer loans from January 2015 to September 2020).
As the Deputy may be aware, the Department of Finance published a paper in 2019 by Indecon Consulting on an Evaluation of the Concept of Community Banking in Ireland. This was a follow on to a previous paper on Local Public Banking published by the Department of Finance in 2018. The Indecon report concluded that there is no business case for the State to establish a public banking system in Ireland, supporting the outcome of the previous report on Local Public Banking. Indecon’s report also noted that there is extensive provision of and access to banking services through some 1,900 bank branches, credit union offices and An Post branches across the country, as well as a wide range of Exchequer funded existing supports.
Credit unions are increasing the offering of financial products for their members. The Credit Union Act, 1997 (the 1997 Act) and the Credit Union Act 1997 (Regulatory Requirements) Regulations 2016 set out the services that credit unions may provide to their members. These include loans and savings under the 1997 Act and a further suite of services under the 2016 Regulations such as third party payments; ATM services; bureau de change and certain insurance services on an agency basis. I understand that a number of credit unions provide some of the services provided for under the 2016 Regulations. Where a credit union wishes to provide other services to its members, an application may be made to the Central Bank for approval to provide such services in accordance with the provisions set out in sections 48-51 of the 1997 Act.
One such additional service includes the Member Personal Current Account Service (MPCAS). In 2016, the Central Bank defined and described a suite of additional services known as MPCAS, under which approved credit unions may offer personal current accounts with debit cards, overdrafts and a wide range of payment services within an appropriate risk framework. To date, 54 credit unions have been approved to provide MPCAS.
An Post offers financial services including a payment account, personal loans, credit cards, a range of insurances, money transmission and foreign exchange services. An Post offers counter services for a number of retail banks, allowing customers to lodge and withdraw cash at An Post branches. There is there is a significant network of post offices in areas where there is no bank branch within five kilometres.