KBC poised to expand Irish operations

KBC bank is expanding its operations in Ireland to take advantage of the economic recovery, says its chief executive, John Reynolds.

The bank is bucking an unwelcome trend as a number of foreign-owned banks are either leaving the Irish market or significantly scaling back operations. Mr Reynolds says he hopes to capture roughly 10% of the mortgage market over the next few years as well as beefing up its retail presence.

The pace of the mortgage arrears crisis had eased considerably over the fourth quarter of last year compared with the first quarter, he said.

The ‘tail’ of this crisis will still be evident this year, which means that the bank will record further losses in 2013.

“But we expect to be moderately profitable in 2014 and much more profitable in 2015.”

KBC has had a presence in Ireland for 40 years and at no time was there a risk that it would “cut and run”, but its parent company did get “quite alarmed” in 2011 when there was widespread talk of general debt forgiveness.

But the stabilisation in the market during the course of last year eased any concerns that may have lingered among the senior management, said Mr Reynolds.

Central Bank governor Patrick Honohan has publicly criticised the banks over the past few months for not dealing with the mortgage arrears crisis in a prompt enough manner.

Mr Reynolds acknowledged this criticism, but he said that there was no quick fix solution. KBC has 10,000 customers that are experiencing varying degrees of difficulties with their mortgage repayments.

The vast bulk only required slight modifications to their mortgage repayments to put them on a sustainable footing.

“Each one of these has their own stories, which are complex. We are working through these on a case-by-case basis as we are obliged to do and we are making progress.”

However, there was a rump of about 10% of these mortgages that were severely troubled.

Mr Reynolds said that in some of the more difficult cases there would be no alternative but to repossess the family home, although every other option would be pursued.

He also declined to say what quantum of debt forgiveness could be expected in the process. KBC has signed up the Irish Banking Federation initiative that would see lenders and borrowers working together to restructure unsecured personal lending in an effort to prioritise mortgage repayments.