Ulster Bank scraps fees as price war begins

A FULL-SCALE price war in the banking sector broke out yesterday with Ulster Bank offering free banking by scrapping current account charges.

Ulster Bank, the third-largest bank with more than 125 branches nationwide, said that new and existing customers will no longer face account maintenance charges, laser/ATM fees or have to pay for direct debits. It has removed fees for setting up overdrafts and introduced Ireland’s lowest overdraft repayment rate.

The move follows Bank of Scotland’s opening of its first high street branches in Ireland in the biggest shake-up of the banking sector in decades.

Ulster Bank said it is the first bank in Ireland to introduce transaction fee-free banking for all customers.

“We are also first to abolish overdraft facility set-up and renewal charges. The launch of Ulster Bank’s transaction fee free banking strengthens our customer offering and ensures a value-for-money retail banking proposition for all our customers,” said the bank’s head of marketing, Brendan O’Hora.

Ulster’s move drew fire from Permanent TSB, which introduced free banking for current account customers last year.

“We opened 67,000 current accounts in all, and while the majority came from AIB and Bank of Ireland, a significant number were accounted for by Ulster Bank. Clearly Ulster Bank is now playing catch-up. We estimate we saved our customers some €5 million in fees during the year,” a spokesman for Permanent TSB said.

So far, Ulster is the first of the big banks to cut its fees in response to Bank of Scotland’s push into the Irish market. AIB and Bank of Ireland, which have a combined 70% share of the current account market, have yet to react to the Bank of Scotland moves.

Bank of Scotland opened the doors of three branches, two in Dublin and one in Limerick, yesterday, and 43 more will open over the next year.

While it has promised competitive rates on savings and loans, Bank of Scotland will not offer current accounts for another year.

When it entered the mortgage market in 1999, it undercut all other lenders by 1.5%, forcing its rivals to reduce their lending rates. The cuts are estimated to have saved mortgage holders around €500m annually in interest payments.