KBC 'will only complete exit from Ireland when 27 tracker mortgage cases settled'

Oireachtas finance committee hears the bank expects to finally exit the Irish market in the second half of 2022

KBC Bank is sticking to its plan to have exited Ireland by late next year but its timing will depend on the Competition Commission decision over its transfer of €9bn mortgages to Bank of Ireland, the bank boss who is overseeing the withdrawal has said.

Chief executive Ales Blazek told the Oireachtas finance committee the bank won't be gone until it has resolved all obligations for its part in the tracker mortgage scandal including 27 outstanding cases brought by its customers that are currently in front of courts. 

On mortgages, Mr Blazek said that, all going well, the bank assumed the Competition Commission would give its decision by the second quarter of next year. That would mean the bank would "probably" complete the transfer of mortgages to Bank of Ireland between August and October, with mortgage customers having been contacted more than 60 days before the transfer, he said.  

Second bank to quit Ireland this year 

KBC was the second bank this year to rock the industry after it said it would follow Ulster Bank by quitting banking in the Republic. It subsequently struck a deal for Bank of Ireland to acquire its performing mortgage loan book of €8.8bn, while selling non-performing loans to vulture fund CarVal which will be serviced by Pepper Finance.   

Mr Blazek told the committee its decision to leave was based on a number of reasons, including the "big changes" in the shake up of digital services that increases pressure on banks to get a return on their money. He also referred to the capital that banks in the Republic have to set aside and acknowledged that Ireland was the only market it was quitting of the many countries in Europe that the Belgian-owned KBC has operations. 

No meetings with Central Bank chiefs

He said the bank faced "substantial challenges" in getting a return on its capital in Ireland, linked to competition and capital requirements, and also from the structural changes taking place in all markets. 

Mr Blazek said he was only newly appointed, and had as yet had no meetings with the most senior chiefs at the Central Bank.                  

The exit in short order of high-profile lenders KBC and Ulster led to a crisis and the further narrowing of competition. Finance Minister Paschal Donohoe last month said he was putting together a panel for a "broad-ranging" review that will consider consumer interests into the way the banks deal with their mortgage and small business customers. 

The Central Bank fined KBC €18.3m in 2020 for its part in the Irish industry-wide tracker mortgage scandal.