Regulator Sibley insists barriers to bank market entry 'incredibly low'

Deputy governor of the Central Bank Ed Sibley told the Oireachtas Finance Committee that the Irish retail banking market is 'somewhat concentrated' by international standards, with the low levels of competition

Central Bank deputy governor Ed Sibley said there is little that should dissuade overseas banks from entering the Irish market.

The deputy governor of the Central Bank has said the barriers to entry to the Irish banking market for any overseas players are “incredibly low” despite the need for improvements across the industry.

He also said any bank exiting the market must fully adhere to legislation and codes of conduct when doing so and factor consumers and a continuity of service into their decisions.

In reference to speculation of Ulster Bank pulling out of the market in the Republic, Ed Sibley told the Oireachtas Finance Committee that the regulator cannot discuss individual companies.

However, he said: “We expect firms to be able to enter and exit the market. If they are to exit it is important they do so in an orderly fashion without too much risk or cost to the taxpayer or the State."

Higher interest rates

Mr Sibley recently said the exit of any of the main retail banks could lead to higher interest rates on customer loans and even a weaker supply of credit.

Mr Sibley told the committee that the Irish retail banking market is “somewhat concentrated” by international standards, with the low levels of competition even more noticeable for SMEs.

He said the Central Bank was trying to address underlying challenges – such as the distressed debt legacy, how banks have been operating, and switching models – but said there was nothing major, including the lack of leading domestic banks paying tax, to put off overseas banks entering the market.

“The barriers to entry to deliver banking services to Irish customers for European banks are incredibly low,” Mr Sibley said.

3,500 jobs at risk

There is widespread concern over the future of the Irish banking sector, with about 3,500 jobs at risk across all of the major lenders.

“Our aspiration is for the banking system – and key markets within that, such as the mortgage market – to function better than it does today,” Mr Sibley said.

He said while individual credit unions have successfully grown their loan books, the overall movement has been slow to grow on the back of being able to offer mortgages and SME loans.

Grilled over its handling of the tracker mortgage scandal, Mr Sibley said the Central Bank was “deeply concerned” over the issue and had done “a huge amount of work to try and rectify the situation”.

He said enforcement work and fitness and probity checks around bank executives remain “open and ongoing”.