Irish Banking Culture Board says level of trust in banks is still underwater

Body set up in the wake of financial crises reports that, while banking is in a state of flux, 'gradual progress is being made'

IBCB CEO Marion Kelly said there was 'some understandable negative public sentiment' in the wake of the Ulster Bank and KBC departures. File picture: Naoise Culhane

Levels of trust in Irish banks from customers and small firms has improved slightly, but remains underwater.

That is the latest finding from the annual survey by the Irish Banking Culture Board, which was set up in the wake of financial crises to help improve standards and engender accountability of bankers. 

The survey also highlighted the trust customers place in relationships with their local branches, even as the banks have closed large parts of their networks in recent years.

Trust levels were running this year at a negative score of 15, a small improvement from a negative reading of 25 points a year ago. The reading for small firms was better, but also remains underwater, with a negative trust score of five points.

The survey comes after another tumultuous year for banking, as competition has shrunk further with the exits of Ulster Bank and KBC Bank in the Republic. The lenders had once competed in pricing banking services and in home loans with AIB and Bank of Ireland.

AIB, Bank of Ireland, and Permanent TSB have benefitted from taking on board around one million accounts from the departing lenders. The survey stated: 

People’s relationship with their local branch, as in previous years, remains the area where trust in banks is strongest.

The culture board is led by a board of 13 directors, including representatives from the banks, consumers, small firms, as well as the Irish Farmers’ Association, and the Financial Services Union. Its report showed “while banking remains in a state of flux in Ireland” that “gradual progress is being made”, it said.

“The challenge is to accelerate the pace of that progress,” said board chief executive Marion Kelly. She said the results also reflected “some understandable negative public sentiment” from the departure of Ulster Bank and KBC Bank.

“Mortgage interest rates became central to the economic narrative, and reports on the large governmental budgetary surplus, a product of bumper corporation tax profits, while significant, came after the survey period.

“Collectively, these events are the prism through which the research outcomes could be viewed and likely informed the thinking of respondents,” the board said.