Dáil Éireann Debate, Wednesday - 31 March 2021
114. Deputy Pearse Doherty asked the Minister for Finance the status of his engagements with relevant parties regarding the withdrawal of a bank (details supplied) from the banking market; his views on the best course of action that would stabilise the banking sector, promote competition and further the interests of the taxpayer; and if he will make a statement on the matter. [17183/21]
View answer122. Deputy Niamh Smyth asked the Minister for Finance the discussions his Department has had with representatives of a bank (details supplied) following its announcement for further branch closures and diminution of services in rural Ireland; the context of these discussions; and if he will make a statement on the matter. [16830/21]
View answer359. Deputy Brendan Smith asked the Minister for Finance if he will reiterate to a bank (details supplied) the need to retain its business network, which is particularly important for many rural communities; and if he will make a statement on the matter. [1827/21]
View answer360. Deputy Brendan Smith asked the Minister for Finance if he will have further discussions with a bank (details supplied) concerning the need to retain its network of branches, protect employment also taking into account its importance to its customers and competition in the banking sector; and if he will make a statement on the matter. [1828/21]
View answer363. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he can take steps to make satisfactory provision for the customers and staff of a bank (details supplied) given the announcement by another bank in relation to the bank’s future here; the extent to which he can encourage other banks to become involved by way of replacing and restoring the role of the bank as a third bank here; and if he will make a statement on the matter. [10587/21]
View answer366. Deputy Neale Richmond asked the Minister for Finance the engagement he has had with a bank (details supplied) in relation to its operation in the Irish market; and if he will make a statement on the matter. [1324/21]
View answerI propose to take Questions Nos. 114, 122, 359, 360, 363 and 366 together.
The 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 their customers and staff and they represent unfavourable developments 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 are 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. I am advised by the Central Bank of Ireland that Ulster Bank’s withdrawal from the Irish market must be undertaken in accordance with the provisions of Irish financial services legislation, including the Central Bank’s codes of conduct.
I note that Bank of Ireland's announcement on the 1st of March set out the following key points:
- 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, Bank of Ireland 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 I have engaged with Ulster Bank, its parent company, NatWest and the Financial Services Union (FSU) prior to this announcement. In all of these engagements, I strongly emphasised the importance of timely communication with customers, staff and other stakeholders in relation to strategic decisions regarding Ulster Bank. I also met with the FSU shortly after the announcement and I have committed to further engagement with the FSU in relation to this issue.
I understand, that there are approximately 2,800 staff employed some of whom are located in Northern Ireland. Whilst the management of staff matters, including staffing levels, is entirely a matter for Ulster Bank and any counterparty who acquires its business, I would expect all stakeholders to be very sensitive in relation to the needs and rights of staff. This includes full compliance with European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003 (TUPE Regulations), and honouring all agreements in place between the bank and staff representative bodies. In addition, I would expect these entities to engage with staff representative bodies as appropriate.
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. Both sets of negotiations potentially signal significant developments for the Irish banking system.
However, it must be acknowledged that these decisions may have an impact on competition in the banking market and are a reflection of the wider challenges banking is facing, not only in Ireland but also abroad.
Innovations introduced by FinTechs and their increasing market penetration are also reducing traffic into the branch networks run by traditional banks. Competing with online firms while coping with high cost structures is posing a considerable challenge for the traditional full service sector.
The Irish retail banking system is concentrated 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, price competition is possible even in a concentrated system.
Notwithstanding the recent announcements in the banking sector, Ireland continues to have an extensive network for banking services, including post offices and credit unions. In addition, An Post offers counter services for AIB, allowing customers to lodge and withdraw cash at An Post branches. Bank of Ireland has announced that it is following suit.
The Government wants to ensure that the banking and financial system is one which will effectively contribute and support economic growth and employment. Competition in the sector is vital to ensure that businesses and consumers have a range of options available when using financial services and accessing credit.
