Jim O'Callaghan
Question:86. Deputy Jim O'Callaghan asked the Minister for Finance the measures he will be taking to boost banking competition nationwide; and if he will make a statement on the matter. [31706/21]
View answerTuesday, 15 June 2021
Questions (86, 377)
Neale Richmond
Question:377. Deputy Neale Richmond asked the Minister for Finance the work of his Department to ensure appropriate competition in the financial services market for consumers given the recent decisions of commercial banks regarding their futures in Ireland; and if he will make a statement on the matter. [31693/21]
View answerWritten answers
I propose to take Questions Nos. 86 and 377 together.
The retail financial services sector is undergoing a major period of change. This year so far we have seen several major announcements including the withdrawal of Ulster Bank by Nat West and the potential withdrawal of KBC Bank Ireland, the forthcoming closure of a large number of bank branches by Bank of Ireland and a smaller number by AIB. While these decisions are regrettable, I welcome the engagements which are taking place between Nat West and AIB and PTSB and between KBC Bank Ireland and Bank of Ireland with regard to the transfer of business.
I note the news on Friday 11 June 2021 that Ulster Bank has reached a new Colleague Agreement with the Financial Services Union (FSU) and that this agreement is subject to a ballot of FSU members. While these are commercial negotiations, the Government is supportive of trying to bring about an outcome that is good for the banking sector, as well as for the staff and customers of Ulster Bank and KBC and for the Irish economy generally.
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, and 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. Overall, this puts pressure on banks' profits, and, in turn, the attractiveness of the market.
The Irish retail banking system is concentrated with retail banks accounting for the majority of new mortgage lending and new 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. An Post also offers counter services for AIB, allowing customers to lodge and withdraw cash at An Post branches and Bank of Ireland has recently announced that it is following suit. A number of non-banks have also expanded their offerings in the mortgage and SME sectors recently.
The Government wants to ensure that the banking and financial system is one which will effectively contribute and support economic growth and employment. Sustainable and responsible competition in the retail financial sector is vital to ensuring that businesses and consumers have a range of banking 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 soon.