Dáil Éireann Debate, Wednesday - 5 May 2021
214. Deputy Cian O'Callaghan asked the Minister for Finance the action he is taking to ensure competition for consumers and to ensure the competitiveness of Irish banks given the proposed sale of a bank (details supplied); and if he will make a statement on the matter. [22952/21]
View answerThe retail financial services sector is undergoing a major period of change. In the last two months, we have seen several major announcements including the withdrawal of Ulster Bank and the potential withdrawal of KBC Bank Ireland, the forthcoming closure of a large number of bank branches by Bank of Ireland and a much smaller number by AIB.
The sector is facing a number of long running challenges such as negative interest rates, technological change that is reducing the barriers to entry to a whole range of new entrants, changing customer preferences as they use more and more digital services, while still wanting the traditional branch network to be available. 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.
As such, my Department is considering a review process that will look at the many issues in depth, provide sensible analysis and implementable recommendations and I hope to be in a position to set out greater details on this in the coming weeks.
