Dáil Éireann Debate, Wednesday - 24 March 2021
468. Deputy Niamh Smyth asked the Minister for Finance if he met with officials from banks (details supplied) to date in 2021 to discuss the move to reduce banking services in rural areas; the details of the latest negotiations by him or his Department on the issue; and if he will make a statement on the matter. [14978/21]
View answerThe withdrawal of Ulster Bank from the market and the decision by Bank of Ireland to close 88 branches in the Republic of Ireland are regrettable, particularly for its customers and staff and is an unfavourable development for the Irish banking market.
Decisions in this regard, including the management of branch networks, are the sole responsibility of the board and management of the banks, which must be run on an independent and commercial basis. The independence of banks in which the State has a shareholding is protected by Relationship Frameworks which are legally binding documents that cannot be changed unilaterally.
Notwithstanding this, Bank of Ireland provided me with a briefing in advance which was consistent with its announcement on the matter on 1st March.
Some of the key points contained in the announcement are:
- The decision to close these branches is in response to changing customer behaviour with a significant acceleration in digital banking.
- The branches closing are predominately self-service locations which do not offer a counter service.
- To preserve local access to physical banking for those who want it, the bank has agreed a new partnership with An Post which will allow personal and business customers use their local post office for a range of banking services – including to withdraw cash and make cash and cheque lodgements – at no additional cost. The closing Bank of Ireland branches all have a post office within, on average, less than 500 meters.
- The bank confirmed that the new partnership with An Post will be available to all Bank of Ireland customers before any branch closes.
- Furthermore, the bank stated that there will be no closures for six months.
On staff, the bank commented that it will be working closely with all colleagues at these branches and will be setting out a range of options which include relocating to a different branch, moving to a new role in the bank, or voluntary redundancy for those who choose it.
I have met with representatives from both Ulster Bank and its parent company, NatWest in recent months. My most recent meeting was with Ulster Bank Chief Executive, Jane Howard, on the 19th February.
The Deputy will be aware that NatWest is in early stage discussions with PTSB and other strategic banking counterparties about their potential interest in certain retail and SME assets, liabilities and operations. A Memorandum of Understanding which has been signed with AIB regarding certain corporate and commercial loans, signals a potentially important development for the Irish banking sector. While these are primarily commercial negotiations, the Government is supportive of trying to bring about an outcome that is good for both AIB and PTSB, but more importantly for Ulster Bank’s customers, staff and the Irish economy generally. NatWest, PTSB and AIB have confirmed that they will provide further updates to the market as negotiations progress in this regard.
These decisions are a reflection of the wider challenges banking is facing, not only in Ireland but also abroad. The impact of Covid-19, coming on top of weak enough economic growth in Europe and America, has already been seen in European banking with consolidation and mergers in other European markets.
In addition, there are major changes driving the consolidation elsewhere. The innovations introduced by FinTechs and their increasing market penetration are reducing traffic into the branch networks run by traditional banks. Competing with lean and nimble online firms while coping with high cost structures is posing a considerable challenge for the traditional full service sector and we are seeing cutbacks in these entities in terms of staff, branches and initiatives to move their customers online.
