Q&A: What's happening with KBC?

As of 2020, KBC had 320,000 customers in Ireland, and most of them have been left scratching their heads after this mornings announcement
Q&A: What's happening with KBC?

KBC Bank Ireland looks set to leave the Irish market after announcing talks with Bank of Ireland. 

Belgian financial giant KBC has announced it is looking to exit the Irish banking market, leaving many customers wondering how this will affect them.

KBC first entered the Irish market in 1978, and since then accumulated 320,000 customers by the end of last year. It also has 12 hubs around the country with 1,260 employees.

As the bank gave no specific reasons for wanting to exit the Irish market, it left many scratching their heads figuring out where they go from here.

What did KBC announce?

While it is not set in stone that KBC is leaving Ireland’s bank market, it did confirm that it is in discussions about the possibility of selling its performing loan assets and liabilities to Bank of Ireland.

This means the deal, if coupled with a separate sale of its non-performing mortgage loan portfolio, would ultimately result in KBC withdrawing from the Irish market.

Currently, it has entered a Memorandum of Understanding with Bank of Ireland (BOI), which could see BOI buying “substantially” all of KBC Ireland’s performing loan assets and liabilities.

Minister for Finance, Paschal Donohoe, was told on a phone call on Thursday night about the decision from the chiefs of both banks.

The minister said the decision taken by KBC is "regrettable" and described it as a "very significant event" for the Irish banking sector, its customers and staff who will be largely impacted by this move.

When are they leaving?

Daragh Cassidy Head of Communications with the consumer comparison website, Bonkers.ie told KBC customers “do not panic.” Similar to Ulster Bank, any departure from the Irish market is likely to be of the order of years.

Mr Cassidy described the announcement as “nothing short of a shock and a further body blow for consumers and competition in the banking sector,” however, discussions are still ongoing as to when KBC will exit the market.

“The wind down of the bank is likely to take years, will be carried out in an orderly fashion, and mortgage and personal loan customers won’t see any changes to their repayment terms or interest rate,” Daragh Cassidy said.

What does it mean for mortgage and current account customers? Is my money safe?

There are no changes to the services provided by KBC today.

Even if you draw down the loan and it moves to another lender in due course, there will be no changes to the terms of the loan.

"Mortgage and personal loan customers won't see any changes to their repayment terms or interest rate. This is true regardless of whether their loans are eventually sold to Bank of Ireland, a new lender, or even a so-called vulture fund," Mr Cassidy said.

The discussions between KBC and BOI will take a period of time to conclude and further information will be shared with customers in due course.

"For the time being nothing changes, neither for existing nor for new customers," the KBC Bank Ireland CEO Peter Roebben.

What has the bank said?

The main message KBC want to get across is - it’s business as usual.

Mr Roebben said that the bank remains committed to offering its retail banking and insurance services.

"The Board and the Executive Committee of KBC Bank Ireland are fully conscious of our responsibilities to our customers and colleagues, and the role of KBC as part of the Irish banking system, and we are fully committed to assuming those responsibilities while the talks with Bank of Ireland are ongoing," the CEO said.

KBC CEO Peter Roebben says it's business as usual. Photo: RollingNews.ie
KBC CEO Peter Roebben says it's business as usual. Photo: RollingNews.ie

Speaking on Morning Ireland Mr Roebben said “there is a long way to go” before any decisions are made and wants to ensure customers and staff that their interests would be equally protected in any deal made.

He said the bank wanted to find a "fair and balanced outcome for staff and customers."

What are my choices in Irish banking?

There will certainly be less choice in an already light banking market if KBC exits the Irish market as Ulster Bank announced they would back in February.

In terms of traditional ‘main street’ banking, Bank of Ireland and AIB, both of which are substantially state owned, and Permanent TSB will be left to serve Ireland’s 5m population - which could be a problem.

It may well be enough to serve Irish consumers, however, it may have an impact on pricing and rates which are largely driven by competition.

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