A bad year for the banking sector
There is no doubt that 2021 has been a very bad year for the Irish banking industry and therefore for the Irish public.
Bank of Ireland has already announced the closure of 88 branches, including two in West Cork, and Ulster Bank will close its Bandon branch following its decision to phase out Ireland.
On top of that, we learned that the PTSB will be closing the cash registers of 44 branches nationwide, including a number in West Cork. And now – the latest blow – is that KBC is in talks to sell its performing mortgages to Bank of Ireland.
Observers believe this is the beginning of the end of KBC’s presence in the Irish market.
Some KBC mortgage holders felt that all was not well when the name “Phoenix 7” appeared on their bank statements recently, instead of the usual KBC rating.
When contacted, KBC insisted it was an ‘error’ in the statements and that she had not sold the mortgages, but had ‘securitized’ them – which means that they have been combined into a separate entity, although still under the auspices of KBC.
But when it emerged this week that some of its performing mortgages could be sold to Bank of Ireland, and the less performing ones to another third, KBC’s loan reorganization started to make sense.
If KBC leaves the market, it will follow in the footsteps of several others before it, including Anglo, ACC / Rabobank (remember that?), Bank of Scotland and Danske.
Only AIB and Bank of Ireland will remain in what is called the “pillar banking” sector.
This is not good news for clients, nor for anyone looking to get a mortgage in the next few years.
Although Ireland has one of the highest homeownership rates in Europe (although this rate rose from 80% to 71% between 1991 and 2018), the banking sector does not seem to be considering the ‘Ireland as a “good bet” for the bank, especially in the mortgage area.
Ulster Bank said a review it had undertaken showed it would not be able to generate long-term sustainable returns for shareholders in the Irish market.
But many observers have since pointed out that the real elephant in the room is the fact that when home loans run into trouble, banks often face a lengthy and costly legal process to recover their assets – that is, that the road to repossession is difficult in this country. .
And while at first glance this looks good for mortgage holders, in the long run it drives many operators out of the country. And, therefore, this is bad news for everyone.