Regulator finds bank departures have been costly for borrowers

In its annual Economic Research Bulletin for 2023, the regulator also said that firms that are typically less likely to access bank financing were gravitating more towards non-bank sources of finance which could create medium-to-longer term risks for these customers. Pic: Larry Cummins

Low competition in the retail banking market following the exit of two prominent players has been costly for borrowers while so-called non-bank entities filled the gap left behind, research suggests.

In its annual bulletin, the Central Bank indicated that the departure of KBC and Ulster Bank left banking customers unable to “perfectly substitute to other sources of borrowing” and were therefore on the hook for establishing relationships with new lenders.