Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach díospóireacht -
Wednesday, 1 Feb 2023

Engagement with Ulster Bank and KBC Bank Ireland

Chairman

Today we are dealing with KBC an Ulster Bank with regard to their withdrawal from the Irish banking market. We are joined from Ulster Bank by Ms Jane Howard, CEO, and Ms Elizabeth Arnett. From KBC, we have Mr. Frank Jansen, CEO and executive director; Mr. Barry D'Arcy, chief risk officer; and Mr. Darragh Lennon, director of retail distribution, in attendance.

I remind members and witnesses of privilege. Those attending from Leinster House or in the campus of Leinster House are covered by privilege and those who are outside of those areas may have limited privilege only. Members are reminded of the long-standing parliamentary practice to the effect that they should not criticise or make charges against a person or entity by name, or in such a way as to make him, her or it identifiable, or otherwise engage in speech that might be regarded as damaging to the good name of the person or the entity involved.

We will begin with opening statements and the members can then ask questions of the banks with regard to the statements or the closure of their operations. Who would like to go first?

Ms Jane Howard

I will begin. Good afternoon to the Chairman and to the members of the committee and I thank them for inviting us to attend today's meeting. I am joined by Ulster Bank’s director of corporate affairs, Elizabeth Arnett. We welcome the opportunity to provide the committee with an update on Ulster Bank’s phased withdrawal from the Irish market. It is almost two years to the day since we announced our withdrawal. At that time, we committed to undertake a phased, orderly withdrawal; to provide support to customers for the changes that were coming; to protect as many jobs as possible; and to engage, in the first instance, with strategic banking partners in the Irish market for the sale of our assets.

We have made significant progress in closing the bank and with each major milestone we have delivered on these early commitments. This will be our fifth appearance at the committee since we announced our withdrawal so today I would like to update the committee on the progress we have made since our last appearance in October. However, by way of a reminder of the progress we have made, we have provided a high-level timeline with this opening statement which I will not read into the record in the interests of time.

Choose, Move, Close is our campaign to support customers moving their current and deposit accounts to another service provider. On the previous time we appeared before the committee, we updated it on the approach we were taking to engaging with customers and the progress we had made. At that time, we were about to start freezing and closing the accounts that had gone beyond their six-month notice period and had little or no customer activity. The key priority of Choose, Move, Close is to ensure customers have safely moved all of their day-to-day banking requirements to a new service provider. We have said to customers from the outset that the final step of closing their Ulster Bank accounts can be taken by them, or completed by us on their behalf. However, before we close accounts, the accounts are frozen. For most customers the account will then be queued for closure because they are no longer using the account. However, if a customer is still using the account beyond their six-month notice period then the freeze provides a final engagement opportunity. It can be temporarily reversed at the customer’s request, at which point we can provide the support the customer needs to move bank.

Since November we have frozen approximately 126,000 accounts that we believed customers were no longer reliant on. That means less than five transactions in a 31-day period. We did not freeze or close any known vulnerable customers’ accounts or accounts in receipt of Department of Social Protection payments.

Only 224 of these customers have asked for the freeze on their account to be lifted, primarily to facilitate the removal of funds, rather than wait for a cheque to issue. In each case we could lift the freeze almost immediately and provide the customer with the extra support they needed. Importantly, despite us freezing these accounts, there has been no spike in the opening of accounts across the industry, as reported by the Banking and Payments Federation Ireland, BPFI. What we can conclude is customers with a current account with less than five transactions in a 31-day window are no longer relying on Ulster Bank as their main service provider.

Some 91% of Ulster Bank personal current accounts are either closed or have five or less transactions. This increases to 95% when personal deposit accounts are included. This trend continues to increase every day for customers approaching their six-month deadline.

Some 81% of Ulster Bank business and commercial accounts are either closed, or with five or less transactions. These numbers continue to increase every day.

I would like to provide the committee with an update regarding customers in receipt of payments from the Department of Social Protection. This time last year 171,000 Ulster Bank customers were in receipt of payments from the Department. That number is now approximately 5,500, which means almost 97% of these customers now have these vital payments being made into an account with another financial institution. We are working very closely with the Department of Social Protection regarding this final group of customers. Approximately half of the remaining group are in receipt of child benefit and the remainder is broken down over a number of schemes, with no more than a few hundred customers in each. As the numbers have reduced so significantly, our efforts and those of the Department of Social Protection can now be very targeted and tailored to these customers’ requirements.

While we have not frozen any accounts in receipt of a Department of Social Protection payment, irrespective of activity level, that cannot be our enduring position. However, the numbers appear to be reducing at a rate that is encouraging. At the start of January, for example, we had 10,000 customers and we will keep the situation under review.

The next steps for Choose, Move, Close are as follows. We will continue to contact our customers, reminding them of the need to take action, advertising nationally and locally, engaging with advocacy groups and, of course, helping customers directly in-branch, online and over the phone. It is in customers best interests to be with another service provider who can meet their financial needs into the future. However, despite all of our best efforts there are approximately 20,000 personal current accounts that have gone beyond their six-month notice period, have not requested an extension and have had six or more transactions in the past month. These are customers who still appear to be reliant on us.

We are now moving to freeze these accounts as a final attempt to engage with these customers. We are ready to respond very quickly to support these customers.

I would like to acknowledge the co-ordinated efforts of the wider industry to support our customers in opening new accounts. I would also like to acknowledge the work undertaken by the Department of Social Protection, direct debit originators, industry peers and many stakeholders in supporting our customers.

In respect of our bank closures, the other significant announcement that we have made since we were here on our most recent visit is our plan to close our remaining branches. Our branch network will close on 21 April 2023, which will be two years and two months after we first announced our intention to withdraw from the Irish market. Ahead of this, on 31 March, we will cease business as usual transactional branch services and our arrangement with An Post will also end. This means from 31 March, customers will no longer be able to make cash or cheque lodgements, either at the counter, or through internal automation devices, or make any form of a withdrawal at an Ulster Bank branch, except for ATM services. Our colleagues will remain in the branches for a further three weeks to help customers complete their moves. Beyond that we will then leave a field team of colleagues to support any customers who might still require support. Our telephony and online service channels will remain in place following the branch closures.

We have been phasing the reduction of cash branch services for some time now. The committee may remember that as part of our phased withdrawal, in July of last year we closed counter services in branches in the afternoon so colleagues could concentrate on helping customers to prepare and move accounts. We also closed 25 branches in January of this year, with minimal disruption, and those branches are now part of the Permanent TSB network. The colleagues working in these branches also transferred or TUPE’ed - transfer of undertakings, protection of employment - to Permanent TSB as part of our agreement with them. As a result of this and other activity at a branch level, we have seen a corresponding substantial tailing off in branch activity, such that we are confident that our timelines for closing our branches is the right one.

Our branch closure announcement brings the much needed and much sought-after certainty to our branch colleagues. I would like to take this opportunity to thank publicly our front-line teams who throughout the Covid-19 pandemic and our withdrawal have continued to serve our customers with professionalism and care. In November, we opened two redundancy programmes and, as a result, some 600 colleagues will leave the bank via redundancy over the coming months, with the timeframe of exit aligned to the business need. Other colleagues have left and will continue to leave the bank through TUPE transfers as part of the bank’s transactions with Permanent TSB and AIB. We also expect to open another redundancy programme later this month, with further redundancy programmes later in 2023 and beyond as the work continues to reduce or cease.

I would like to focus on those customers who find themselves in financial difficulty as this was a point of interest at our previous appearance last October. In planning our withdrawal and the various phases of our closure, we could see from the outset that a non-performing loan, NPL, sale would be necessary. We set ourselves an objective of ensuring we do everything we can to support customers to revert to performing status so the NPL sale would be as small as possible. We have deliberately left the NPL sale to the later stages of our withdrawal journey to allow customers more time to revert to a performing status. What is clear from our experiences in supporting customers in financial difficulty is the importance of engaging them so we can consider each customer and their individual circumstances on a case-by-case basis. When customers engage with us in this process, more often than not, we can work with them to provide an appropriate solution that either keeps them in their home and-or avoids an impact on their credit rating, depending on the type of debt.

With regard to mortgages, we have applied a case clinic approach to supporting our customers in the non-performing mortgage book, and we have seen these loans reduce by about 25%. As a direct result of this support, some 1,200 customers have now been either included in our transactions with Permanent TSB or AIB or they have redeemed or settled their mortgage.

For customers with problematic overdrafts, we contacted these customers very early on in the process to offer them support. We have a suite of solutions available to these customers and we are working with them on a case-by-case basis to ensure that they, in so far as possible, do not have an impacted credit rating. While we still have some way to go right now, approximately 1,200 customers are being managed by our arrears support unit for overdrafts in excess of €1,000, with an additional 5,300 customers with an overdraft of less than €1,000. We will continue to provide support to these customers.

In September 2022, we wrote to all of our personal credit card customers, providing them with six months notice to choose an alternative provider if required, to move their recurring transactions, pay the outstanding balance and close their Ulster Bank credit card. Ulster Bank credit cards will no longer work from the end of the six-month notice period, or shortly thereafter. This six-month notice period will end on 22 March, next month. We are continuing to communicate with customers ahead of this date and assist those who may need additional support.

We have taken a very proactive approach to supporting vulnerable customers and have detailed this to the committee on previous occasions, so I will not repeat the evidence already presented at the committee. However, by way of a reminder, we have provided a list as a summary of our outreach work with these customers. I do not intend to read that into the record in the interests of time. Today, we have approximately 2,000 known vulnerable customers. Each one has been assigned to a member of our team and is getting individual support to assist them in moving to another bank. The majority of known vulnerable customers will be with a new service provider by the end of March, in advance of branches closing. Other vulnerable customers, such as those following the assisted decision-making route, will be well on the way in their journey to a new provider by that time too. Even after 21 April, we will still be supporting vulnerable customers with practical assistance with their move, for example, printing statements, providing them with a list of all their direct debits or conducting a warm handover by introducing them in person to a staff member in a bank of their choice.

There are many other aspects of our withdrawal that are ongoing and are likely of interest to the committee. As I said, we have made significant progress but we know there is a significant amount still to do and we are determined and committed to finishing well. In the interest of time, I will conclude my opening remarks and I look forward to the discussion and any questions.

Mr. Frank Jansen

I welcome the opportunity to address the committee. I am accompanied by my colleagues, Barry D’Arcy, executive director and chief risk officer; Darragh Lennon, director of retail distribution; and Brian Buckley, who heads our current account programme. We look forward to a constructive discussion regarding the current account closure process and related issues as KBC continues an orderly exit from the Irish market.

Since we last met with the committee in October 2022, the agreement relating to the sale to Bank of Ireland received approval from the Minister for Finance. The completion of the remaining technical steps and customer migration will mark the conclusion of the sale process to Bank of Ireland. We remain absolutely committed to managing this process responsibly over the coming period and we will work with Bank of Ireland to keep our customers and staff updated on the process and timelines.

We understand that this year is bringing significant change for KBC customers as we begin to wind down our operations in Ireland, and this includes managing and progressing the current account closure process. As this committee is aware, KBC current accounts are not part of the transaction with Bank of Ireland, which means that customers are required to move and close current accounts. We understand the critical importance of a functioning current account in people's daily financial lives, which is why we have dedicated a significant number of colleagues to ensure the process is as simple as possible.

I would like to provide this committee with an update on the current account programme. While we believe progress is being made, we understand there is work to do over the next number of months. In May last year, we estimated, based on our data, that 52,000 of the 130,000 total number of KBC current account holders would need to open a new account or move to a new provider. Based on the same analysis, we estimated that the remaining 78,000 already had an account with another provider. Today, our estimates show that the number who need to open an account or move to a new provider is already down 50% to 26,000. I can confirm that all current account customers have now received account closure notices. At the very start of the process, we focused on taking care of priority customers, including those in a vulnerable position and people over 65. They were prioritised from the outset and we can confirm that more than 90% of those accounts are now inactive.

While there is more work to be done, we have made good progress on closing current accounts and helping our customers move their daily banking to new providers.

I will give some statistics. There has been a 178% increase in current accounts with a zero balance. To date, more than 40,000 current accounts have been closed or are now blocked. We have seen a significant decline in overall activity across current accounts with debit card transactions down 61%, account balances down 50% and direct debits down 62% to 82,000. Another key indicator of declining activity is the level of social welfare payments paid into current accounts. That has decreased by 75%, with just 3,200 accounts remaining in receipt of such payments.

As we outlined to the committee last October, the first wave of current account closures, which consisted of 3,000 inactive accounts, commenced in December following a series of communications with the holders of the accounts over a six-month period. This process is ongoing and will accelerate in the coming months as notice periods begin to expire, continuing up to the third quarter of this year. We continue to work with and support customers as they move their accounts, ensuring they have all the information they need and understand the actions they are required to take and the timelines associated with those actions.

In addition to the six months’ notice of closure, we are monitoring current accounts to ensure that those with active incoming payments, direct debits, standing orders, social welfare payments or overdrafts are given additional time. These customers receive follow-up engagement from our team to support them in moving their accounts. In order to facilitate customers to the greatest extent possible, KBC Bank Ireland has put in place a process whereby accounts, prior to final closure, are blocked for a three-week period, enabling engaging customers to reopen them if really required.

As our data demonstrate, customers are taking action in moving their current accounts. As of today, all formal notices have been issued and our team will continue to do all it can to guide customers through the closure process. As I said here before, our customers are our customers until they are not.

Our 12 hubs will remain open until customers have transferred to Bank of Ireland. Visits to our hubs are down 50% since June 2022 and we understand from customer behaviour that KBC’s contact centre is their preferred choice, with over 90% of customer service queries handled through the contact centre. The average wait time for a call from a customer to be answered was 26 seconds last year and we are confident that we will be able to continue to support our customers in a timely manner as we wind down our operations in Ireland.

Following the transfer to Bank of Ireland and as part of the wind-down of our business in Ireland, we will ensure that we have the necessary staff in place to support the needs of customers, while respecting the needs of our colleagues. We have met with all our staff on an individual basis and provided guidance on their expected departure dates. In this and next year, staff will depart on a phased basis in line with the needs of the business to ensure that we continue to provide the same level of support and service to our customers as we progress through our wind-down plan. I recognise the enormous work and efforts of our colleagues in their support for customers since we announced our plan to exit the Irish market.

A successful engagement process with the employee council, which represents staff interests, culminated in that body securing a redundancy package that compares very favourably in the sector. We continue the principle of consulting and communicating with staff directly on an ongoing basis.

On the subject of TUPE and the transfer of staff to Bank of Ireland, I can confirm and said last time that the consultation with Bank of Ireland concluded in July last year. All eligible staff have been communicated with directly regarding the transfer of their role and how their employment terms and conditions have been protected. It is too early to state the final number of employees who have chosen to transfer to Bank of Ireland as they are entitled to change their decision up to the point of migration. Our estimate is that about 50 colleagues will make that choice.

I express my deep gratitude to all my KBC Bank colleagues who, over the past two years, have worked to the highest standard in providing continued support to customers during a period that is also challenging for them. My colleagues and I are happy to take any questions members might have.

Deputy Pearse Doherty

Cuirim fáilte roimh na finnéithe. I welcome the witnesses and thank them for the updates. It is regrettable that we are having this hearing when we are at an advanced stage of both institutions withdrawing from the State after, in some cases, a long presence here.

The focus of today’s hearing is the progress, lack thereof and challenges that may remain in the closure of Ulster Bank and KBC and in the transfer of accounts. Hopefully, the publicity that may be generated from this meeting will bring awareness to individuals of their responsibilities in respect of the closure of the banks and the potential adverse impacts if they do not engage.

I will start with Ulster Bank and my colleague might pick it up with KBC, or I might get a chance. I also have a question on trackers I want to ask at the end. Ulster Bank has frozen 126,000 accounts since November and only 224 have asked for the freeze to be lifted. The Central Bank has been before the committee and has welcomed the progress. It suggested the banks were not where they needed to be but were getting there. There are still issues regarding vulnerable customers but the fact the freeze can be lifted has been welcomed. How many of the accounts frozen since November have gone past the 30 days, a cheque written and the account closed?

Ms Jane Howard

I will take current accounts, which is probably the most important category. We froze 60,000. Just under 16,000, as of last Friday, had been closed. The cheques are on their way to those customers.

Deputy Pearse Doherty

Those 16,000 have been closed by Ulster Bank, as opposed to the individuals.

Ms Jane Howard

Yes.

Deputy Pearse Doherty

The bank has closed them and issued the cheques to the individuals.

Ms Jane Howard

Yes.

Deputy Pearse Doherty

Out of curiosity, what will happen if there is nobody living at the address registered on the account? These are people who have not engaged with the bank for at least six months because we are well past the six-month period. Some may have moved to Australia, Denmark or God knows where. What happens when a cheque is returned?

Ms Jane Howard

Does Ms Arnett want to talk about the process we put in place for that?

Ms Elizabeth Arnett

Yes. Before we started writing and before we started the choose, move, close campaign in April, we did a refresh on all our customer data to fill any gaps. Over the six-month period, a number of correspondences were sent to customers. If correspondence was returned, we have taken those customers aside and done an investigation or a track-and-trace exercise to try to identify where they are now. We have not continued to write to the same address when we know a customer is not there. Cheques do not go to addresses where we are aware the customer does not reside there any more and the cheque would not go to the right person. When we identify an issue with where a customer is, we have been able to put that customer into a different category.

We are continuing to try to identify who they are, but I am sure there are some that we do not have that information for. The best information we have is the last address that they gave us.

Deputy Pearse Doherty

I understand there will be challenges for the bank on that. I can remember being a student and seeing a pile of post from previous tenants in flats that we rented at the time. It is normal, particularly if people are out of the country and so on and so forth. The post could arrive, but it might land in a pile and could sit in the corner on a table. There could be accounts with a couple of thousand euro in them. It could be a lot more; we do not know. Perhaps Ms Howard could give an indication of some of the higher amounts that the bank has had to issue to individuals in cheques. What happens if the cheque cannot be landed or is not cashed because it is posted to a flat that the individual is no longer living in or has not been living for the past five years, which is another issue? For example, a cheque could be sent to me because I have not engaged with the bank. If it is not cashed six months later, it will be void and the bank will see that. What are my rights in that situation? Where is it held?

Ms Jane Howard

The Deputy will still have all those rights. After six months, the cheque is no longer legal tender and cannot be cashed. We will open a trustee account and we will have a record of any customers who have not cashed their cheque. They will always have a right to that money.

Deputy Pearse Doherty

Will interest build up in the trustee account?

Ms Jane Howard

When somebody comes in, depending on the amount, we will look at that and understand what we owe them.

Deputy Pearse Doherty

I am not asking for any specific detail on the upper limit of cheques that the bank has to cut for accounts that are being closed. The bank could have sent Joe Bloggs €30,000 in the post. What are we looking at in terms of potential amounts? The reason I ask is people might think that they had a student account or an account that they opened with Ulster Bank many years ago and they need to check it out. What are the upper limits that the bank is seeing at the minute?

Ms Jane Howard

The vast majority of the accounts that we have closed so far have very low balances of less than €10. There are some customers with higher cheque amounts. We are not sending out a cheque in excess of €10,000 without doing more track and trace, to speak to Ms Arnett's point. We are making sure that for fraud and other reasons, we look after those. We have some at the upper limit, but the vast majority are very low balances.

Deputy Pearse Doherty

Is the upper limit tens of thousands of euro or €100,000 and above?

Ms Jane Howard

The vast majority are very low and we are not looking at figures in anything like the amounts the Deputy is talking about.

Deputy Pearse Doherty

Okay, but there are some above the €10,000 figure?

Ms Jane Howard

Yes.

Deputy Pearse Doherty

Okay.

Ms Jane Howard

We have dormant accounts that have high balances that ultimately go into the NTMA scheme.

Deputy Pearse Doherty

The Dormant Accounts Fund. However, these funds will go into a different trustee.

Ms Jane Howard

These are going to a trustee, and at some point they will go into the-----

Deputy Pearse Doherty

They will go into the Dormant Accounts Fund because they become dormant.

Ms Jane Howard

Yes.

Deputy Pearse Doherty

There are a number of accounts into which social welfare payments are paid. The witnesses have said 5,500 accounts are open into which the Department of Social Protection is making payments currently. They are not being closed and they have not been frozen, which I welcome, but the bank has stated that it cannot continue with this position. Can Ms Howard outline the bank's position? Where is this going? These are active accounts. Is the bank identifying accounts into which social welfare payments are made but there are no transactions on the account? There are two different questions.

Ms Jane Howard

It is fair to say that some of them are active and some are not. However, we have been working closely with the Department. Perhaps Ms Arnett will talk about the next steps with them.

Ms Elizabeth Arnett

At the start of January, there were approximately 10,000 accounts. That figure has dropped by 4,500 in the past four and a half weeks, which is welcome. Of the remaining 5,500 accounts, approximately half are in receipt of child benefit. Child benefit is not means-tested, so it does not indicate that there is vulnerability there necessarily, but we are going to make the assumption that there is. The remaining accounts are spread out over a series of different payment schemes, such as living supplements, pensions and so on. Right now, the Department of Social Protection is targeting customers where the numbers are higher. They are using social media and advertising campaigns, as well as the direct communications they have used previously. We are doing the same. We are contacting customers as they come into the branch, making it clear and simple so that customers know exactly what to do. They do not have to have the public services card to give the Department of Social Protection their new account details. It can be done simply over the phone or in writing. We are making sure that customers are aware that it is a simple process and that they do not have to have gone go through the rigours of getting the social identification card. That is definitely resulting in some customers changing. Approximately 800 have changed accounts in the past week. We are also contacting customers who are coming up to the end of their notice period and reminding them that if they have a Department of Social Protection payment going into the account, they need to get in touch with us. For the next couple of weeks we are going to allow all of that activity to play out. We expect and hope that we will get the same rate of change of up to 800 or 900 customers changing every week. We are then going to get down to small numbers of customers who are potentially vulnerable. We are going to cross-reference those with our vulnerable customer team. We have individuals assigned, across the bank, who, for want of a better word, own each individual vulnerable customer. We are confident that the resources are in place to hand-hold those customers out of the bank and into another service provider, and that the majority of them will be moved by the end of March.

Deputy Pearse Doherty

Is there going to be no freezing of these accounts at this point in time?

Ms Elizabeth Arnett

To date, we have had no plans to freeze those accounts.

Deputy Pearse Doherty

Okay. That is welcome. The bank will be aware of the implications of the Assisted Decision-making (Capacity) (Amendment) Act 2022, which is causing serious problems right across the banks and terrible problems for parents, by the way. There is no guidance for parents of vulnerable children or adults who have bank accounts and who lack capacity. I understand there is a bit of an extension for financial institutions. I refer to cases where an individual was able to operate a bank account on behalf of a person who may have lacked capacity. That will no longer be the case. We have serious problems because Ulster Bank is closing these accounts at the minute. How is the bank dealing with those cases?

Ms Jane Howard

First of all, we are not closing those accounts.

Deputy Pearse Doherty

I am sorry; the bank will eventually close the accounts. They are not being frozen straight away.

Ms Jane Howard

Yes. These are the accounts where we have a dedicated person within the organisation to look after them. We have a specialist team working with them to look at how we can get them, where possible, through the scheme. We do not have a solution for it yet, but we are also looking at whether there is any way we can work, through the BPFI, to get these customers' accounts open safely with another bank and with protections in place. We understand exactly what the Deputy is saying. It is hard to be able to help these customers, but the protections are there to try to protect them. We are mindful of this and we are not going to be freezing the accounts. That is one of the reasons we are keeping the field team. Even after we have closed the branches, we will keep people here and available to support them for as long as we need to.

Deputy Pearse Doherty

As I said, it is a wider issue in that people simply do not know what steps and the process they have to go through to be able to operate the account on behalf of another person.

Ms Jane Howard

Exactly. That has been the benefit of having a dedicated team. They understand the process and can explain it to family members or whatever. It is important that we follow it properly.

Deputy Pearse Doherty

A total of 20,000 personal accounts remain open, active and are past the six-month notice period. The witnesses said that the bank will start freezing these accounts.

Ms Jane Howard

Yes.

Deputy Pearse Doherty

Just so we are completely clear, when the account is frozen, do direct debits and payments still continue, or is all activity on the account frozen?

Ms Jane Howard

The Deputy has referred to the 20,000 customers who are not where we want them to be. We had hoped that they would have taken action by now. We will freeze them in a phased and orderly manner, in the way we have done everything. Approximately 2,000 to 2,500 will be frozen a week, in the coming weeks, starting next week. When we freeze the account, it freezes everything so, for example, if a direct debit comes into the account, it will be rejected. What that enables us to do with the customer is that the direct debit originator can see that the account is with Ulster Bank. It will get in contact with the customer. What we have found is that customers will then get in contact with us and we can get in contact with the customer. We can lift the freeze virtually immediately - in 15 minutes where we need to. We can then help the customer to agree on which bank they are going to, how to move things across and how to change their direct debits. That is what we need to do. These 20,000 customers sort of fall into two cohorts. There are some who have been open with us about the fact that they are just not going to go until they are made to and there are others in respect of whom we do not know why they have not left. They are the ones we are most worried about, but we have a team ready to support them in the coming weeks.

Deputy Pearse Doherty

The bank has 6,500 customers with overdrafts, some above €1,000 and some below €1,000. Ulster Bank is suggesting that those customers go to another bank, get an overdraft and pay back Ulster Bank with the overdraft from the other bank. Are there any arrangements with the other banks?

For example, does Ulster Bank have an arrangement with AIB and Bank of Ireland regarding an individual who has an overdraft with Ulster Bank and, therefore, needs an overdraft with whichever bank they move to to close this? If that person is not able to get an overdraft, what happens? What will Ulster Bank do in respect of that outstanding loan?

Ms Jane Howard

I will talk about our personal customers because business customers are on a different route. For example, for a business customer going to AIB, the overdraft is part of the arrangement for that customer.

Deputy Pearse Doherty

Yes, I am talking about personal customers.

Ms Jane Howard

The important point I will make regarding our personal customers is that they are customers with overdrafts. They do not have a credit rating issue and are good for credit. In the vast majority of cases, we expect them to be able to get an overdraft with another organisation.

Let us talk about the problem cases. Where personal customers can get an overdraft with another organisation, that is fine. Where they cannot, that is when we need to support those customers. Tools are available to us that we use. We look at customers on a case-by-case basis. As I said, these customers are good for credit so it could be that they can get an overdraft with another provider but not necessarily at the same level. If these customers engage with us, we can understand what we can do in those circumstances. For example, it might mean that part of the overdraft is left with us and we agree a reduction programme with them. We are trying to help these customers. Our job is to try to maintain their financial position. We do not want to get to a place where we are reporting to the credit rating agency because we need to-----

Deputy Pearse Doherty

Has Ulster Bank had to do that yet?

Ms Jane Howard

No. We have not had to do that so far.

Deputy Pearse Doherty

Has Ulster Bank procedures in place to do that?

Ms Jane Howard

We have procedures in place and we have to follow Consumer Credit Act, CCA, guidance. As I said, these customers might be able to get a loan or overdraft. Undoubtedly, there are some for whom a personal loan is probably a better product, where they might have built up an overdraft that is not necessarily fluctuating. That is something we would talk to them about with another provider.

Deputy Pearse Doherty

Okay.

Ms Jane Howard

If they are good for the credit-----

Deputy Pearse Doherty

I just want to go into a matter that others may pick up. There are people not engaging who have overdrafts.

Ms Jane Howard

Yes.

Deputy Pearse Doherty

What is the approach to that?

Ms Jane Howard

That is why we will now freeze those accounts. It is important these customers engage with us. We know from experience that where they engage, typically, we can do something to help them but we need them to engage.

Deputy Pearse Doherty

I will raise the issue of tracker mortgages. Ms Howard made an interesting comment on the restructuring of non-performing loans, NPLs, namely, that there has been a reduction of 25%. Is that in line with previous quarters or years? Has the focus on Ulster Bank withdrawing from the market allowed it to cut better deals or different structures in respect of those loans? Are there lessons for other financial institutions, since Ulster Bank will be out of the country soon?

I do not want to go over old ground regarding what Ulster Bank did in respect of 6,000 tracker mortgage customers. However, it sold a large number of family loans to vulture funds in the past. I want to know whether it sold any that were subject to the tracker mortgage examination. It sold 2,300 to Cerberus in 2018. We are now being contacted by people saying they were part of the tracker mortgage examination and were deemed an NPL because Ulster Bank was wrongly taking their money from them. They will now end up paying a 7% interest rate from tomorrow. They will pay 7.5% when the ECB puts up its interest rate at its meeting and, four weeks later, they will pay 8%. They are utterly screwed as a result of the decision of Ulster Bank to sell on to vulture funds, which is something that should never ever have happened. KBC is in the same boat where €1.1 billion in loans was sold to Caravel. Did Ulster Bank sell any NPLs that were tracker mortgages subject to the examination, that is, people holding them had received compensation or a positive decision from the Financial Services and Pensions Ombudsman?

Ms Jane Howard

I am not aware that we did. Once again, I offer our deepest apologies for getting the tracker mortgage issue horribly wrong. We have all learned lessons from that. No excuses are being made. I am not aware that we sold loans where we did not remediate, but I will have to confirm that point for the Deputy.

Deputy Pearse Doherty

To clarify, the question is not about whether the bank remediated. All these people who were part of the examination had to be remediated. The question is whether Ulster Bank sold their loans on during or after the process? Are their loans now in the hands of vulture funds?

Ms Jane Howard

I will have to come back to confirm.

Deputy Pearse Doherty

I would like KBC to answer that as well. If the representatives do not have the information to hand, they can give it to the committee later.

Deputy Jim O'Callaghan

I welcome our guests. I suspect this may be our last rendezvous so I thank them for coming before us. I am not saying it has to be, but I suspect it may be our last meeting with them.

I will continue with Ulster Bank. I am sorry that all the questions seem to be directed towards Ms Howard and Ms Arnett. I am sure we will get to KBC in due course. Of the 126,000 accounts that Ulster Bank has frozen since last November, what is the quantification of the amounts held in those accounts?

Ms Jane Howard

The vast majority of those 126,000 accounts have balances below €10. As we said, they are typically accounts that are inactive but we have a distribution of balances. Some are higher.

Deputy Jim O'Callaghan

What is the highest amount in an account?

Ms Jane Howard

I do have not that to hand.

Deputy Jim O'Callaghan

Does Ms Howard know the total amount held in all 126,000 accounts?

Ms Jane Howard

I do not have that information to hand. We can certainly share it. Once we freeze an account, we close it one month later and send a cheque to the customer. As per the earlier question, we are monitoring whether those cheques are cashed and, where they are not, we are conducting track and trace to make sure we can try to locate the customer wherever possible. Ultimately-----

Deputy Jim O'Callaghan

Is it more than €1 million in total across the 126,000 accounts?

Ms Jane Howard

I will come back to the Deputy with the exact figure, if that is okay.

Deputy Jim O'Callaghan

Are many of the accounts held by non-residents?

Ms Jane Howard

No. A small proportion are. Typically, the non-resident accounts are for UK-based non-residents. That caused us some challenges in the early days because account holders will get a euro-denominated cheque but will not necessarily have a euro account. Following Brexit, such account holders cannot open an account in Ireland. We have dealt with that problem and have helped those customers, who are typically in the UK.

Deputy Jim O'Callaghan

Of those 20,000, who could be described as very loyal customers, is it the case that Ulster Bank simply cannot get rid of them?

Ms Jane Howard

Our people in our branches, our front-line colleagues and everybody across the bank are very proud of the service we have given over 180 years. These are customers who enjoy banking with us, in some cases, and value the service and products they had with us.

Deputy Jim O'Callaghan

Does Ms Howard think there is a general awareness on the part of those 20,000 customers, but they simply will not take any active steps themselves?

Ms Jane Howard

In some cases, for sure. Customers have said that. They have been quite open with our colleagues and said they are not going to close their accounts until they have to. Equally, some of the customers, which speaks to Deputy Doherty's question, may be overdrawn, reluctant or concerned and, therefore, have not taken action. That is why it is important we reach out to them. There will undoubtedly be a cohort who, for whatever reason, including time and so on, just have not got around to it.

Deputy Jim O'Callaghan

How many of Ulster Bank's staff are being offered redundancy? Is it correct that 600 will be offered it?

Ms Jane Howard

At this stage.

Deputy Jim O'Callaghan

How many other staff does Ulster Bank have? What is its plan in respect of redundancies for them?

Ms Jane Howard

We had 2,200 colleagues. Approximately 600 will go on transfer of undertakings, TUPE, agreements, whether that is to AIB or PTSB. As we said, we are offering redundancy to colleagues. All colleagues will leave at some point. We will have a very small number of colleagues who will remain in whatever entity we need, once we have revoked the licence and get another one. We are trying to go beyond the typical three- or four-months' notice for colleagues and give them as long as possible. Colleagues are telling us they want to know their dates. Once they have certainty regarding their date, they can look for work outside the bank and start having sensible conversations with potential employers.

Deputy Jim O'Callaghan

Ultimately, every member of staff will either be made redundant or will go elsewhere voluntarily.

Ms Jane Howard

I expect most of them will be made redundant. We will keep a small group of people because we will still have work to do, whether it is complaints or whatever.

Deputy Jim O'Callaghan

What is the final date for when the last of the redundancies will be completed?

Ms Jane Howard

I expect the vast majority of colleagues will leave this year. There will then possibly be a few hundred who will leave during 2024.

We have made great progress, but there is still considerable work to do. Even after we have helped the vast majority of our customers to move, there will still be vulnerable customers we need to help. As to the earlier question, we may have customers with overdrafts who need support. There is still considerable work to do to finish this well.

Deputy Jim O'Callaghan

Will Ulster Bank hand back its licence to the Central Bank as the final act in its wind-down?

Ms Jane Howard

Yes, we revoke the licence.

Deputy Jim O'Callaghan

When will that be done?

Ms Jane Howard

There are rules and a long process with the Central Bank. We have a scenario in place, but it certainly will not be this year. At the very earliest, it will probably be 2024.

Deputy Jim O'Callaghan

What is the quantity of money in the accounts that KBC has frozen?

Mr. Frank Jansen

I ask my colleague, Mr. Lennon, to comment on that.

Mr. Darragh Lennon

We closed approximately 3,000 accounts in December. The balance on those was very limited. There was approximately €30,000 in the 3,000 accounts. The majority of the balances was €10 or less. We also froze another 11,000 accounts in January. I do not have the figure to hand as to the total balance on those, but we can come back to the committee with the figure. In the vast majority of those accounts, approximately 10,000 of them, the balance was less than €50. It was pretty limited.

Deputy Jim O'Callaghan

Are many of them non-resident account holders?

Mr. Darragh Lennon

A very limited number are. There is a small number of them, but they are people who have moved away from the State subsequent to having opened the account, rather than anything else.

Deputy Jim O'Callaghan

When will the redundancy package KBC is offering will be concluded?

Mr. Frank Jansen

We are stepping two steps back here. All colleagues who were eligible for TUPE had the opportunity to take a decision to move to Bank of Ireland. A few more than 600 colleagues had that opportunity. Of all those colleagues, as we see today, 50 of them have made that decision. Our employee council has negotiated a redundancy package with the bank, which will be applicable to all colleagues who do not choose TUPE. The entire staff will be eligible for a redundancy payment. We have committed to keep our activities in place in order that we can service the off-boarding and leaving of our current account customers. That will happen in phases until quarter 4 of this year.

After the transaction with the Bank of Ireland, we have servicing agreements in place with them. We will service customers, but we will also service Bank of Ireland for inquiries our customers may still have about issues that happened to us, or the customers may come directly to us. We have agreed with Bank of Ireland about how to deal with these questions. Our plan is that colleagues will leave over the next two years, in a phased way, and all our employees will be entitled to redundancy.

Deputy Jim O'Callaghan

I will ask Mr. Jansen a question, since he has experience of banking outside of Ireland as well. I am sure Ms Howard does, too. There is considerable disappointment on the part of this committee that KBC is leaving, primarily, because it reduces competition in the Irish banking sector. How many banks that offer personal banking services does a country the size of Ireland need in order to ensure active and vibrant competition in the sector?

Mr. Frank Jansen

There is an offer and competition in the Irish market. There are banks, non-banks and fintechs. Ireland remains an interesting market to which to come for those participants.

Deputy Jim O'Callaghan

Why do we only have two of what we would regard as banks that offer personal service in the traditional way? Is that sufficient for competition here?

Mr. Frank Jansen

A third bank certainly has an ambition to join that rank, but it is very hard to say how many banks a country requires. One sees concentration in many markets.

Deputy Jim O'Callaghan

Will Ms Howard hazard an answer?

Ms Jane Howard

The purpose of the banking review is to determine what the structure should be. Three banks, because there will be three traditional banks, may be sufficient, supported by new banks that offer a different service. For any country, it is always about the balance. A country wants good competition which makes traditional banks improve. We saw that with the digital development in all of the banks. The development probably would not be where it was, if new entrants had not come in with those sorts of services.

At the same time, we all know from the crisis that a country wants strong, well-capitalised banks that can carry any debt in the event of an economic crisis, because crises happen and will always happen. There is always a balance between having good, healthy competition and making sure banks are strong enough, with enough business and well-capitalised. That capital comes from retained profits. There is always a balance, when one thinks about what is right for each individual market.

Deputy Jim O'Callaghan

Do I take from what Ms Howard is saying that she thinks the stability of the three banks we have is more important than having a lot of competition in the market?

Ms Jane Howard

There is competition in the market, as well as the three banks we have, but it is not for me to decide what is right for Ireland. The banking review will determine what is appropriate.

Deputy Mairéad Farrell

Gabhaim buíochas leis na finnéithe as teacht os comhair an choiste arís. I thank the witnesses for coming before the committee. An issue has been raised with me about micro-businesses and SMEs. I will ask the Ulster Bank representatives to reply to this first. How many remaining SMEs and microbusiness customers with overdraft limits does Ulster Bank have?

Ms Jane Howard

A few thousand of our micro-SME customers have overdrafts-----

Deputy Mairéad Farrell

What range does Ms Howard mean by, "a few thousand"?

Ms Jane Howard

I think approximately 6,000 of them have an overdraft-----

Deputy Mairéad Farrell

May I ask for clarification? Ulster Bank has 6,500 personal customers and another 6,000 SME customers. Is that correct?

Ms Jane Howard

More than 6,000 customers have a personal overdraft, but 6,000 are micro-SME customers. We decided, early on, to look at which of those customers might have a challenge in getting an overdraft facility with another organisation. It is important we put on the record that we are selling our loan book for our micro or small businesses to Permanent TSB. It has put in place an easier process for any of these customers who may want an overdraft. Permanent TSB has gone to great lengths to make sure it is as easy as possible for these customers.

When we looked at those 1,075 customers, we were concerned they might have some challenge in getting an overdraft with any financial provider. We did an immediate outreach to them to understand whether our perspective was right and to see how we could help. Some 295 customers have repaid and closed. I do not know if they have got a facility with another bank, but I assume they have. Some 650 customers said they expect to repay their overdraft and do not see a problem with it, but that left us with a small cohort of approximately 100. Some have engaged with us and others have not. We are actively helping the customers who have engaged. We will ultimately freeze the accounts of the ones who have not engaged. They will engage with us at that point, the final opportunity to engage, and we will see what we need to do to help them.

Deputy Mairéad Farrell

I am trying to get my head around this. I have a few questions in order that I can get a full understanding. I might refer back to the numbers Ms Howard mentioned. Is it correct to say that once these limits are removed, those customers will be classified as being in financial difficulty, under the terms of the SME regulations?

Ms Jane Howard

What will happen with these particular customers is-----

Deputy Mairéad Farrell

However, if-----

Ms Jane Howard

-----we will freeze the accounts and then we will give them a period of time to repay the debt with us.

In circumstances where customers cannot repay the debt, we will then go by the SME regulations, so we will have to follow those, and we will put customers into the arrears process and see how we can restructure.

Deputy Mairéad Farrell

Would they then be in financial difficulty? If it is out of the way they would be classified as being in financial difficulty under the SME regulations?

Ms Jane Howard

Yes, under the SME regulations.

Deputy Mairéad Farrell

Would that then impact customers in terms of the central credit register?

Ms Jane Howard

Potentially, yes.

Deputy Mairéad Farrell

Would it affect their credit score?

Ms Jane Howard

Yes, potentially, if we cannot find a solution for them.

Deputy Mairéad Farrell

Why "potentially"? How can that happen in some cases but not in others? Surely it would be both.

Ms Jane Howard

Often when we engage with these customers we will find that there is a way to support them, and to potentially restructure their debt and get it on to a reducing amount over a period. It could be that they can get a smaller overdraft with another bank or another financial institution. Until we have helped them on a case-by-case basis we do not know what the number would be. Ultimately, there probably will be some customers who either do not engage or we are not able to help and so it will be important that we then follow the SME regulations.

Deputy Mairéad Farrell

I understand that banks have a responsibility, under the SME regulations, and are obliged to assist customers in that sense.

Ms Jane Howard

Absolutely.

Deputy Mairéad Farrell

I want to know up to what point. Is there a particular length of time?

Ms Jane Howard

It is not necessarily time-bound. There are timelines laid out for when you actually serve notice and crystalise the debt.

Deputy Mairéad Farrell

How long?

Ms Jane Howard

We would give customers longer than the SME regulations.

Deputy Mairéad Farrell

What are the two timelines?

Ms Jane Howard

I believe the timeline for the SME regulations is 30 days after you have crystalised the debt and served notice, and then you have gone into the arrears process. It is in our interest and that of customers to give them a bit longer than that. So once we have frozen the debt and gone into the process, we will see how long they need to repay the debt. The most important thing is that customers engage with us. Once they engage with us then we can agree timescales that work for them. Undoubtedly, there will be some where we cannot find a solution but it is in our interest and that of customers to try to find a solution.

Deputy Mairéad Farrell

Yes. That aspect arises all the time.

Ms Jane Howard

Yes.

Deputy Mairéad Farrell

We have always said that it is important that customers to engage but now we are getting to a crunch point for a lot of businesses.

Ms Jane Howard

Yes.

Deputy Mairéad Farrell

I am acutely aware of the impacts. Inflation is now at its pre-Covid rate so small and micro businesses are in a very difficult situation. We need to be frank and say that this is not as if the bank is leaving at a different point in time. I understand that some of these customers who are trying to find new banks have been told they must first wait until 12 to 18 months of trading has elapsed while being a member of the bank in order to get an overdraft, which puts businesses in real difficulty. We all know of businesses that are really struggling. Can Ms Howard confirm that this is her bank's experience of the small and micro businesses that it deals with? What feedback has she had about this situation?

Ms Jane Howard

As I said, the PTSB has put a streamlined process in place so I am surprised that we have got that feedback and we will convey it to the BPFI. To date, we have not heard that somebody has been told they must wait 12 to 18 months.  That is why the PTSB has something streamlined in place. We can provide customers with dates that show how they have been trading so that they can get an overdraft with another organisation, the PTSB or a bank of their choice. We will take that point back through the BPFI.

Deputy Mairéad Farrell

Ms Howard has said that something is being streamlined through the PTSB. Is she saying that customers immediately get the exact same facility they had before with Ulster Bank?

Ms Jane Howard

No. PTSB and any other bank have to make sure that customers are good for credit. We all have to do that as banks. Banks will look at their latest trading position and understand how their accounts have been working with us and then they will agree an overdraft limit they believe is appropriate within their policies for lending money.

Deputy Mairéad Farrell

Let us say I had a business that sold tea to this committee, business was normal for a long number of years, and I always had a solid business for 20 years. Then Covid hit so the committee conducted meetings using MS Teams and I could not sell my tea to the committee. Now, costs have increased due to the war in Ukraine so my business is experiencing a difficulty. To recap, my business has existed for years but now it is in a difficult position so I have greater reliance on the overdraft facility, and now I must move my account to a different bank that does not know me and, therefore, I might not have access to the same kind of overdraft facility. Am I correct that such a new situation could have a serious impact on any business?

Ms Jane Howard

Yes. An overdraft can be the lifeblood of any small business.

Deputy Mairéad Farrell

Yes.

Ms Jane Howard

That is why we tried very early to identify where we found customers that we thought might have a challenge with getting an overdraft and that comes back to the 1,075 figure. We are down to about 100 customers, the vast majority of whom have said that they believe they can get an overdraft and should not have any difficulties. We need to monitor the situation and make sure they do get an overdraft with somebody else and, if they do not, then the figure of 100 might go up. I have given their view. More than 300 customers have already repaid their overdraft with us.

All the banks, through Covid, supported both personal and business customers. There is an absolute recognition that that trading period was not a normal trading period for most businesses. Some businesses flourished but the vast majority did not. Therefore, banks should look, and I know do look, at the current trading position and viability of the business in terms of its income and expenses. That is normal banking procedure every time one assesses somebody for credit facilities.

Deputy Mairéad Farrell

What is a normal retrospective period for the PTSB?

Ms Jane Howard

I cannot comment on what PTSB does but I can say what I would have done when I was there looking after small businesses. Typically, one would look at three years of trading performance. Given that we had Covid then I think most organisations today would, possibly, discount that year and might look back one further year. Typically, one would see what happened after Covid and how business had ramped up since Covid. Typically, one looks at three years but anybody today, with experience, would know that one would need to discount the Covid period. It comes back to these 100 customers that we are concerned about. Again, if the Members hear of any businesses in any of their constituencies that are struggling please ask them to engage with us and we will see how we can support them. We can give them all of their information on the way they have used their accounts with us. They will have all their trading records and accountants will be there to support them so people will be able to provide the information that the PTSB or any bank would need to support them with whatever their overdraft needs are.

Deputy Mairéad Farrell

Regarding personal and business accounts, once Ulster Bank has withdrawn how can people access their bank statements? How far can people go back in terms of accessing their bank statements once Ulster Bank leaves? What is the process involved in getting bank statements?

Ms Jane Howard

When we wrote to customers advising them to close their accounts we guided them to, say, download their statements because most people get their statements automated.

Deputy Mairéad Farrell

Quite a lot, yes.

Ms Jane Howard

All customers were urged to ensure they have downloaded their statements and then they will have their details available to them. Undoubtedly, there will be some customers who have not and we have a process in place so that if they come back we can download for them, particularly at the end of the last financial year when they might need them for their accountants.

Deputy Mairéad Farrell

Let us say I had a business and I downloaded my statements on my laptop here but it goes bust or maybe I forget how to log in, etc. what can I do at that point to get statements? Also, there are people who do not know how to download. Let us say I realise in three years' time that I need my bank statements. How would I go about retrieving them?

Ms Jane Howard

As I said, we will keep a small team of people available here. Should a customer have that sort of difficulty and really need his or her bank statement then that team would be able to access them for them. What is most important is that customers have downloaded their statements and have them available.

Deputy Mairéad Farrell

Yes but, as Ms Howard will know, things can happen.

Ms Jane Howard

Yes, some will miss it.

Deputy Mairéad Farrell

People may put their statements in a drawer and then cannot remember doing so, and they are left in a bind. I ask KBC the same question.

Mr. Frank Jansen

For the SME customers, our portfolio is small and very niche..

It is very much focused on what we call private professions such as doctors, dentists and pharmacists. These are the typical customers that we have in our portfolio.

Bank of Ireland has taken over the loan book. The overdrafts are not taken over automatically but there is what we call a warm handover process. Bank of Ireland will have all the statements and financial information because it is taking over all the loans. It has an interest in ensuring these companies continue to flourish and do their business. It has engaged with us and it will look at the numbers without taking into account any obligations of historical performance with the bank. It will look at the information we have available in order to make its call on the overdrafts with customers. I have not heard of any customers who had a problem with that. Mr. Lennon may wish to add to that.

Mr. Darragh Lennon

Our micro-SME business only started in 2019.

Deputy Mairéad Farrell

That is why my questions were more for-----

Mr. Darragh Lennon

I believe we have ten SME customers still using an overdraft. They are all involved in a warm handover process to Bank of Ireland. We do not envisage any difficulties there. As the numbers are very small, they can effectively be looked at one by one. There are no issues there.

Deputy Mairéad Farrell

On the question of the bank statements for-----

Mr. Frank Jansen

We also have these in place for longer, making that information available to customers.

Mr. Darragh Lennon

It is generally much less of an issue for personal customers, once the six-month period has passed.

Deputy Mairéad Farrell

That is true. However, as Mr. Lennon knows, we are often asked to find something but do not know where we have put it.

Deputy Bernard J. Durkan

I welcome our guests appearing before the committee again. My questions are for both banks. How good are the banks' customer relations with their staff?

Ms Jane Howard

We have what we call a formal staff survey.

Deputy Bernard J. Durkan

I am asking about a good relationship with staff.

Ms Jane Howard

Yes.

Deputy Bernard J. Durkan

The banks need a good relationship with customers, of course, but it should apply to staff as well.

Ms Jane Howard

Absolutely. One of the commitments we have made to ourselves is that we would work closely for our customers and our colleagues throughout. Things that were important to our colleagues as time has worn on were certainty of dates as to when they would be leaving the organisation and open communication. How could we be as open as possible? They accept that we cannot always give them certainty. We need to see customer behaviour, for example, before we could give an indication of when we might be able to close the branches. We have worked very hard on communication.

We have many formal and informal opportunities for staff to make suggestions. We have changed many things because of the feedback we have had from our front-line and other colleagues. We carry out a formal survey once a year. That was improved. We had an external person. We tried to understand what it would look like for a bank that is withdrawing. I think it is fair to say that the engagement levels are very high.

As Mr. Jansen's bank has done, we have also put in place an attractive redundancy programme and package, including a €5,000 grant in order that people can upgrade or upskill if they want to go into another business. Overall our engagement with our colleagues is very good. That is not to say that we do not still have colleagues who are upset that we are leaving. However, they understand that the decision has been made. They have been doing a brilliant job in supporting our customers. They have also been doing a great job of looking after one another. We had the Covid pandemic and now we are leaving. I cannot praise these staff highly enough for how they have supported one another. Engagements are good.

Mr. Frank Jansen

I would add to that. In the beginning it was very difficult to give full clarity to colleagues on what was going to happen and when. They really felt the need to be informed and to get that information. Once things became a bit clearer for us and we started this personal engagement with customers, people then understood that the bank was leaving the market and that they would be leaving the organisation over time. People have been making remarkable efforts for customers, for the organisation and for each other. The engagement between people and the organisation and their colleagues is quite good.

Deputy Bernard J. Durkan

In view of the long transition period and the uncertainty, was consideration given to compensation for the staff in recognition of their particular situation in order to enable them make their own financial arrangements because they also have lives to lead?

Ms Jane Howard

I will ask Ms Arnett to comment here. We have put enormous effort into looking after our colleagues, including well-being, financial well-being, CV writing and interview preparation. Ms Arnett has been leading on that with some of our other ex-colleagues.

Ms Elizabeth Arnett

When the news of our departure first broke, all of us went through shock. People get used to the idea and then start looking to the future. Throughout that entire period we have had to recognise the uncertainty about the withdrawal, including the lack of dates because we had not made decisions about certain things that needed to happen, such as when we asked customers to move their accounts, when we finished deals with the sale of assets, when we closed our branches etc. We have had to balance these competing priorities of making sure we can provide the best care for our customers and at the same time recognising this is extremely challenging for colleagues. We have had a good solid programme of engagement. We have engaged with colleagues on everything that is happening, explaining why we cannot give certainty and what are the sorts of triggers that need to happen before we can be clear with colleagues as to what their personal circumstances and dates would be.

As Ms Howard alluded to, inasmuch as we possibly can we are front-running. Different colleagues will have different formal or statutory notice periods, but as much as we possibly can, we are laying out the pathway over a longer period of time, well beyond the three months' or even six months' notice period so that colleagues can start planning for themselves. Knowing that they will be here for another six months or another year allows them to understand the things they need to do for their career now in order to be ready for that departure.

We have an extensive programme of upskilling, professional qualifications and training for colleagues. People working in a bank get a diverse range of experience. They do not necessarily want to move into another bank; there are many other opportunities for colleagues. We have been very open to ensuring that colleagues are thinking along those lines and making sure they are availing of all the additional training and supports to bring them to the end of their career with Ulster Bank with the best possible opportunity to move on to whatever they want to do. A year ago, one colleague left to train as a midwife. There are many different opportunities for people and we have been encouraging people to think differently about it. Without doubt, certainty as to when the change will happen is the most important thing for colleagues. We are now in a very good position. As of last week we have been able to set out the departure date for our branch colleagues. Most other colleagues will have an idea of when they will be departing this year. That has been very important. We acknowledge that it has been a long time coming. It has been two years almost to the day since we announced our withdrawal and yet we have only just been able to give absolute certainty to our front-line colleagues as to when they will leave. They have done an amazing job under those very difficult circumstances and we all very much appreciate that.

Mr. Frank Jansen

We have set up a well-being programme and a training programme. It is amazing how many colleagues followed different professional training and qualification opportunities both in the financial industry and outside it. We have also given financial packages to colleagues to keep them motivated during the year.

We have been supporting colleagues from well-being to looking to the future. We have been training people so that they know or helping them to decide on their future financially. We can only be grateful for the fantastic job that they continue to do with us for the moment.

Deputy Bernard J. Durkan

Have any lessons been learned from the transition? I would have thought it would be simple to transfer from one bank to another in today's technological world. I would have thought that it would have been possible to flick a switch, press a button, and turn the account or accounts over to another bank. I note Ms Howard disagreeing with me but I do not accept that at all. I think it is possible to do that and it could have been done. It would have been a lesson well learned for the convenience of the staff and the customers. I cannot understand why that could not be done because it can be done with everything else. It happens all the time.

It would have been simple, for instance, in relation to overdrafts, to transfer the overdraft as well. Why not? The bank account statements of the previous six months or year, or whatever, from the outgoing back were readily available. All they had to do was switch over. Instead of changeover, it was a continuation. I wonder whether any lessons have been learned in that regard by either bank.

Ms Jane Howard

The first thing I would say is that we have learnt an enormous amount, not only on the point the Deputy is making. One learns every day, but we have certainly learnt an awful lot as we have gone through this process.

I was smiling because I absolutely agree that for a current account, you would think it could be a lot easier. It gets more complex, though, when it is something like an overdraft because every bank has to make sure that it is following its policies in terms of its lending, its risk appetite and looking at where it now has concentrations of risk. It is not as easy for an overdraft but that is not to say it could not be easier than it is today.

I absolutely understand why the Deputy would think it would be easy to transfer a current account. We do not have a full-switch service here, as we do in other countries where it is much easier. It is not at the press of a button, as the Deputy described, but it is much easier in other countries.

Deputy Bernard J. Durkan

I would argue that it was not a change so much as an extension without a duplication, as though the package was removed from one area and placed in another. All the conditions that applied to the first location applied to the other - simple, quick and all in the space of minutes.

Pardon me if I do not agree readily, but I do not. I would take a lot of convincing on that one. It would have been much more satisfactory, from the customer's point of view, from the staff's point of view and, I believe, from the banks' point of view.

The next question is in relation to the interests. For instance, have these banks brought many of their customers with them to the parent branches in the UK, Belgium or wherever?

Mr. Frank Jansen

We are servicing individual customers-----

Deputy Bernard J. Durkan

From here?

Mr. Frank Jansen

There is legislation and regulation around servicing customers in the country. This is called the anti-money laundering, AML, or know-you-customer process. It is hard to move a customer living in Ireland who is doing his daily financial life in Ireland with all that to another country. The regulator of the receiving country would not accept that. A lot of procedures would have to be put in place to do that. It is not so straightforward.

Deputy Bernard J. Durkan

The customer here could open an account in the other country.

Mr. Frank Jansen

It is not so straightforward.

Deputy Bernard J. Durkan

But not impossible.

Mr. Frank Jansen

It is not so straightforward because one needs to have a link with the country where one is opening the account.

Deputy Bernard J. Durkan

I understand you can still open an account in the Bank of America or its equivalent here. Why could that not be used?

There is another side of this argument as well which I want to explore for a minute. Mr. Jansen says it is not impossible, it can happen but it is not easy. That means it can happen.

Mr. Darragh Lennon

It would require a lot of customer action for that to happen in any event.

Deputy Bernard J. Durkan

It would require action. One would sign the application form.

Mr. Darragh Lennon

There is signing the application. The person has to become a customer of the bank in Belgium, for example. That effort-----

Deputy Bernard J. Durkan

The person is already a customer of the bank.

Mr. Darragh Lennon

The person is a customer of the legal entity here in Ireland in our case-----

Mr. Frank Jansen

Yes.

Mr. Darragh Lennon

-----and that is a slightly different nuance, unfortunately.

Deputy Bernard J. Durkan

I will leave that for the moment and move on to something else. What interests do each of the banks continue to have of a financial nature in this jurisdiction? For instance, do they have preferred customers, important customers or substantial customers? Does KBC Bank Ireland retain an interest there?

In relation to the Ulster Bank, for example, a financial institution from the UK featured in recent dispatches here. Albeit a so-called "vulture fund", it located in the UK, outside of the European Union, of its own accord. My question is, to what extent do the banks present have any similar arrangement whereby they could involve themselves in financial matters here of a venture nature or are they barred from doing that?

Ms Jane Howard

In terms of the Ulster Bank withdrawal, the strategic decision was made to withdraw from the market. We will not be keeping, to the Deputy's point, preferred customers or anything like that. When we revoke the-----

Deputy Bernard J. Durkan

Why not?

Ms Jane Howard

To revoke the licence, one cannot keep credit balances for customers. One would not be able to do payments for customers. Once one revokes the licence, one would not be able to offer a service. It is certainly not our intention to have ongoing business here in Ireland once we revoke the licence.

Deputy Bernard J. Durkan

Therefore, Ulster Bank will not have any such current business with customers in this country after the expiry of the transition period.

Ms Jane Howard

That is right.

Deputy Bernard J. Durkan

Will everything be cut?

Ms Jane Howard

Yes.

Deputy Bernard J. Durkan

How then does a financial institution, such as we heard about in the past week, make a major intrusion into the Irish market given that similar circumstances would apply, which we have all talked about in the past? Ms Howard might comment as to why that would not be possible, given that Ulster Bank is departing the market here and that a new bank lending institution, venture fund or whatever is coming into the market from the same location?

Ms Jane Howard

In respect of Ulster Bank, the decision has been made to withdraw. I am not say a decision could not be made. It was different. The decision has been made to withdrawn. At the point when we revoke the licence, we will not be in a position to be able to offer a service to customers.

Deputy Bernard J. Durkan

Therefore, NatWest will not be coming in under any other guise.

Ms Jane Howard

That would be a question for NatWest. As far as I am aware, as CEO of Ulster Bank, we will be revoking our licence and the intention would not be to continue business.

Deputy Bernard J. Durkan

Pardon me if I am not enthusiastic in my embrace of the reply but I am not suggesting that Ms Howard is saying other than as she has been informed and as she sees it. However, Gresham House is in the course of attempting to move in, offering financial services to, presumably, a lot of people.

I must pose that question in order to satisfy my curiosity, among other things.

I will finish by saying that, at this level, both banks have always been very courteous and helpful whenever we have raised any issues. It did not always happen that way further down the line. There may be reasons for that. The Chairman knows the reasons for it as well with regard to people of interest in terms of membership of political parties, exposure and so forth. The presumption of guilt in all of these matters is a dangerous route to go. I have been involved in many arguments with people on the degree to which inquisitorial investigations were conducted, without authority and permission and in a sneaky way. The witnesses would regard such investigations in that way if faced with them. However, that is all over and done with now.

As customers of lending institutions and as public representatives, we need to keep in mind the manner and methodology used for putting pressure on public representatives. We must remember that lending institutions can do it themselves, and have done it in the past. This is a sensitive area about which the Chairman and I know about from countless dealings on our own behalf and on that of customers. The amazing thing was that the vast majority of public representatives and their families knew nothing about that inquisitorial campaign at all, which is completely at variance with EU law. Yes, it happened.

I thank the witnesses for being courteous and effective. For those who were not, I do not acquiesce, but I note it.

Senator Maria Byrne

I thank the witnesses. I have two points. Any other comments I might have made or questions I might have asked have already been covered. The first question is to KBC. I have one or two people who completed their mortgages 16 to 18 weeks ago. They received letters stating that they would receive the deeds to their homes by registered post within six weeks. They still have not received them 16 to 18 weeks later.

Deputy Farrell referred to businesses not being able to get overdrafts from their new banks. I raised that previously at this forum with the two banks because it was raised with me. Businesses are having difficulties, even though they can show that they have been trading with either KBC or Ulster Bank for the previous X number of years. Because they do not have 12 months full trading with the new bank, it is very difficult to get a loan or an overdraft.

Mr. Frank Jansen

I will try to answer the Senator's first question. Under the agreement we have with Bank of Ireland, the credit offers that we have given to customers will be honoured by Bank of Ireland going forward. The Senator's contacts should be assured that if they have received that offer that it will be honoured by Bank of Ireland.

Mr. Darragh Lennon

If I understand correctly, the other point was about the deeds on completion of a mortgage. If the Senator could supply the customer names, we could look into that. We have a process for the issuance of deeds after a mortgage is completed, and that should operate normally. If it has not in those circumstances, we apologise. We will look at those cases individually and make sure they get dealt with.

Senator Maria Byrne

They received a letter saying they would receive the deeds within six weeks. It is 16 or 17 weeks later and they still have not received them. I will get the name and address and forward it to Mr. Lennon.

Mr. Darragh Lennon

Yes, and we will make sure that is dealt with straight away.

Senator Maria Byrne

That is great. I thank Mr. Lennon.

Ms Jane Howard

With regard to the second point, I do not know if the Senator heard earlier, but we will pick that up with BPFI about business customers requiring 12 months experience with a new bank.

Senator Maria Byrne

That is great. I thank the witnesses very much.

Senator Marie Sherlock

I thank the witnesses for attending. I have one question, and it is directed to Ulster Bank. It relates to the management of the pensions of Ulster Bank staff. In recent days, I have learned about situations where female workers will leave Ulster Bank with lesser pensions than male counterparts of exactly the same grade and length of service. That is at odds with pension law in this country. It appears that what happened relates to the 1980s. Some were paying contributory pensions, typically men, while others were paying non-contributory pensions, typically women. The issue here is that there was a Pensions Act in 1990 which sought to eliminate the differences between male and female pension contributors. My understanding is that Ulster Bank took no action to correct the issues after the 1990 legislation. Staff today are weighing up the three options available to them, namely, early retirement, redundancy or taking a lump sum. There is a difference for women of a particular age among the staff who are weighing up their options relative to their male counterparts, in particular because the women workers do not have any death-in-service benefit relating to their pension.

This is a complicated question and I do not expect the witnesses to have the answer, but I would like the witnesses to state whether they are aware of the issue and, if so, what investigations or actions have been taken in response to a historical pension issue that is materialising now, if I could put it like that? If the witnesses are not aware of or have not been acting in respect of the issue, will they investigate it? It is important to say that this is not confined to one person. I am aware of a number of cases. One case went to the Pensions Authority some years ago in the case of a terminally ill female worker of Ulster Bank. Is Ulster Bank aware of the issue that I have set out and, if so, what is being done about it?

Ms Jane Howard

I was not aware of that issue. We take our pension responsibilities very seriously in terms of the pension scheme rules, the deed and also the law. Let me take the issue away. We will make a note of it. There are a number of pension schemes but we will feed it into the appropriate pension scheme trustees so as to understand what the issue is. We take our pension responsibilities very seriously, so I am disappointed to hear what has been raised and to learn that we have not dealt with it. If Senator Sherlock leaves it with us, we will see where it is at.

Senator Marie Sherlock

I thank Ms Howard very much. That is all from me.

Chairman

Earlier, Ms Howard referred to credit cards. Could she tell us the numbers involved in this regard and how the bank assists its customer to get different credit cards?

Ms Jane Howard

I said earlier that we served notice. This will expire in March. The reason we chose March is so that it will coincide with the date relating to stamp duty. Once we freeze an account, stamp duty is not required to be paid. This makes it easier for customers.

We will freeze the debt. Customers will then need to get a new credit card from a new supplier and transfer the balance. There are plenty of offers on the market for people who want a credit card with zero balances and goodness knows what else. For our customers, this is the one area in respect of which we have seen an increase in debt. As a consequence of inflation and some of the pressures we are under, we have not seen an increase in overdrafts or other areas. However, we have seen an increase in this area. We reached out to the affected customers to understand what support they need. Some of our customers have what we call a revolving balance, which means it moves but they do not always pay it off. Some 84% of our customers have an outstanding balance of less than €1,000. They should have no problem getting a credit card and getting the limit. We also have a large cohort who have credit cards that are inactive. Approximately 24% pay the balance off every month. They are not going to have a problem.

Chairman

Can Ms Howard give us some real numbers?

Ms Jane Howard

It is hard to speculate until we know the individual position of each customer but as we look at the numbers, we are reaching out to approximately 5,000 customers who we think may have a challenge. The limit, as I say, could be less than €1,000. The figures are a bit higher for others. We need to reach out to those customers to understand. We will not understand the extent of the problem until we get to 22 March. We will understand at that point how many customers have a new credit card and have cleared the balance, and how many need support and help. As I have said, when it comes to overdrafts or anything else, the important thing is that customers engage with us if they need support.

Chairman

Ms Howard has said that 5,000 customers may have a challenge. How many customers are yet to engage? How many are trying to get another credit card?

Ms Jane Howard

The full extent of that will come out after 22 March. At the end of December, 52,000 of our customers had credit cards. Of those, 12,00 are not active at all and another 16,000 pay off their balance every month and will have no problem at all in clearing their balance and getting a new credit card. That leaves just over 20,000 customers who do not want to pay off the whole amount outstanding but we can see they are paying an amount. The issue we will need to understand is whether, when they apply for a new credit card with a different provider, they will get a credit card that clears the debt or not. We do not know the answer to that at the moment. If the committee wants that information, we will have to come back when we know how the position will crystallise. The important point is that if anybody is in difficulty at that time, they should engage with us so we can understand how to help.

Chairman

What has the engagement been like in respect of the balance of credit cards where there is a problem getting the customer another credit card or where there is a balance involved? How does Ulster Bank engage with customers to assist them in getting another card?

Ms Jane Howard

We will not know who has a challenge in respect of credit cards until the situation crystallises on 22 March. That is the date on which customers will need a new credit card with a new limit, and enable them to clear the debt. We have been actively engaging since March and April 2022. We targeted the 5,000 customers who we thought might have a challenge to clear their balances. In fact, 75% of those customers engaged with us and we saw a reduction in their exposure. If they can now get a credit card at that lower amount, their needs will be sorted out.

We ran a second campaign in October. That campaign lasted approximately eight weeks. It was similar to the first campaign except we extended it to another 10,000 customers to understand how they felt about getting a credit card. With that particular cohort, it is fair to say the majority were confident they would be able to get a new credit card.

Chairman

At the end of March, Ulster Bank will freeze the credit cards.

Ms Jane Howard

That is so.

Chairman

At that time, a customer may have a negative balance.

Ms Jane Howard

That is right.

Chairman

The customers who had those cards can go where they wish to try to get another card elsewhere. That is their business. Ulster Bank has not engaged with any other credit card company or bank to try to transition affected customers to another bank.

Ms Jane Howard

That is right. We considered whether we could sell the credit card book, if you like, to another financial institution but there were challenges in respect of the technological complexity and the third-party suppliers that use the credit card system. It made it too complicated and risky. Therefore, we made the decision to engage with customers, give them as much notice as possible and allow them the option of the credit card they want. They can make the choice and then pay off debt with us.

Chairman

If those customers are paying monthly bills from an Ulster Bank credit card, they had better change before the end of March.

Ms Jane Howard

They will need to get-----

Chairman

Otherwise they are going to be in serious difficulty with all sorts of service providers.

Ms Jane Howard

That is right. We must communicate that.

Chairman

It is not that easy to switch.

Ms Jane Howard

I think it is quite easy to get another credit card. There are lots of opportunities. We are not hearing any challenges from customers. We have made it clear that once 22 March comes, the debt, if you like, is frozen. To the Chairman's point, if customers pay any of their bills from those credit cards, they will need to transfer their bill to a new supplier.

Chairman

Ulster Bank will then pursue the debt with each customer.

Ms Jane Howard

We will. If customers do not get a transfer, we will then go into the debt collection process, which is laid out. A customer who misses a monthly credit payment will fall into our arrears process and move into our collections area. We will work with the customer to see how the debt can be repaid.

Chairman

Ms Howard estimates the relevant figure is that approximately 5,000 people may face difficulty.

Ms Jane Howard

It is probably less, given the progress that has been made with those customers. When we get past 22 March, we will have a much better understanding of how many customers may be in difficulty.

Chairman

That is when those customers will have a problem.

Ms Jane Howard

It will be, but if they engage with us, we will be able to help. If customers currently pay a bill with their Ulster Bank credit card and do not have another credit card in place, they will be able to pay that bill by another means, perhaps via a current account or another means, until a credit card is set up.

Chairman

I think committee members have finished asking questions. I thank our guests for their attendance today and at previous sessions. I also thank them for the manner in which they have dealt with exchanges at this committee. I wish them well for the future. I hope that for those lingering accounts, credit card or otherwise, the customer will come first, even though Ulster Bank is leaving the market. That might be the best approach to take to the customers with which the bank still has to deal. I thank our guests again.

The joint committee adjourned at 3.28 p.m. until 1.30 p.m. on Wednesday, 7 February 2023.