Matt Shanahan on Bank Exits and 900,000 Customers' Choices

The Minister, my question relates to the steps that you and the Department of Finance are taking to provide further consumer choice in the Irish retail banking sector, particularly with the exit of two main banks. I want to thank the Deputy for raising this issue because it is an issue that affects hundreds of thousands of people, especially since Ulster Bank announced a withdrawal from the Irish market, a part of the NatWest Group and KBC have announced likewise. The retail financial services sector is going through a major period of change. In the last year we have seen a number of announcements from the main retail banks in relation to their operations in the state and that also includes reductions in the branch network around the country. While decisions relating to the business models of regulation firms are a commercial matter for the boards of those organisations, neither the Department of Finance nor the Minister of Finance or the Central Bank can interfere in those commercial decisions. But we can ensure and ask them to ensure that it is a consumer-focused approach that is top of their priority when it is dealing with those affected customers. On the specific issue of the banks leaving the market, I want to point out that the Minister and officials and myself have met with a range of providers in the retail banking services last month, particularly in relation to current accounts, including the remaining banks and the credit unions to discuss what they will do for impacted customers. The Irish retail banking system is concentrated by international standards, but it does not mean necessarily that competition does not exist between those particular players. The changes recently taking place in the Irish retail banking sector are a reflection of the wider challenges the banking sector is facing, not only in Ireland but abroad. Because of these changes, the Minister has instructed the Bank or the Department to undertake a broad-ranging view of the retail banking sector. The issues raised by the Deputy will be considered by the review that is currently underway as part of his work in assessing the current landscape for the provision of retail banking services in Ireland and its likely evolution over the coming years. The team will also look at the size and structure of the sector in Ireland and similar sized open economies in the EU and OCD. That report will be published later on this year. As you have outlined, KBC and Ulster Bank are leaving the Irish market and with that 900,000 account holders approximately need to find a new home. That process is ongoing to a degree, but it is causing a lot of anxiety for people. Some of those customers will actually have left the banks that they are now going back to, maybe over disputes over years of where they were refused credit. They are now finding that their choice is being reduced. You have spoken about the accommodative actions that the existing banks are providing for new accounts. I would say to you it is probably a fact now that Ireland's regulatory regime is not attractive to new entrants. That is our major problem and that is the lack of choice that is available in the banking sector. I suppose you would quickly refer to processes that might be undertaken to allow On Post and the Credit Union to compete more favourably in the Irish banking market, particularly at the retail end. Thank you. I hear what you say about the regulation is not conducive. It is all about providing financial services. Every single financial service provided in Ireland does not have to be provided by a regulated body in Ireland. It can be regulated in any EU country and provide their services here in Ireland. For example, I do not want to over-mention, but there are 1.6 million Revolution card holders in Ireland today. That is very significant. Changes are happening and notwithstanding the narrowing of the banking structure, there is an increase in range of banking services and financial services available to customers who choose those products. The first thing I would have to say to customers of the two institutions that are leaving is be proactive. Start opening your new account in your new financial institution as soon as possible. In relation to the credit unions and On Post, I would encourage people to go to those. On Post actually opened 30,000 new current accounts in the first three months of this year. The credit unions are already in situ in some of those banks that are leaving, Ulster Bank in particular. The local credit union has a stand in there a couple of days a week. I have met several credit unions that their staff have actually moved in. So when people come in, the local credit union has a stand in the bank premises, in the bank banks that are scheduled to close. I would say to people to be proactive and not to wait until the last minute. Thank you. Minister, my main concerns and of course the retail banking sector is very important, but I think what most people now would be concerned about is the access to finance and the access to credit. Particularly if you are in the construction sector, in the manufacturing sector or particularly in the agricultural sector at present, there are major headwinds there in terms of where you can go to access finance. That is a big problem and it raises a question in terms of, and I accept that Revolut are in the market here in terms of retail services, but is there anything that the department can do to put pressure on the system or to bring in legislation to allow people to access funding from Eurozone banking? We are members at the end of the day of the EU and yet we are closed out from any accessing of European banks. It is very, very difficult unless they are large-scale conglomerates to try and access funding for large-scale project work. And those that can are well able to do it, but for smaller manufacturers and particularly for the farming sector, they have very, very limited options though in terms of funding. And in relation to the farming sector, you mentioned the credit union, as you know, have a very good product there called Cultivate. There are several credit unions, I think in all the provinces in Ireland, providing that scheme, 50,000 unsecured loans to farmers. It may be not a lot in terms of some of the scales of farming activity, but it is quite significant for a lot of farmers. And that is an important source of new finance in that sector. What I would say to people as well, and what the Central Bank is most keen on, and the Minister of Finance and Central Bank are using this, it is important that the closure of these institutions in Ireland be conducted in an orderly basis. And generally they say to people, you will have six months to close your account and open a new account when you get the letter. But I would ask people to be proactive and not wait until the last minute. And I think the Deputy knows we cannot stop the banks leaving in Ireland. I know we have AIB and Bank of Ireland, but definitely I believe NatWest, who are also investing in Permanent TSB, taking a 20% stake, we will actually have three major banks operating in Ireland in the immediate future, and especially one of them with a significant investment from the State, like the Permanent TSB and NatWest. Thank you very much.