Varadkar: 'No answer' on how to stop duopoly between Bank of Ireland and AIB

KBC is the second major bank this year to announce it is leaving Ireland after Ulster Bank owners NatWest said last month that it will be closing up shop too. Picture: Brian Lawless/PA

The Tánaiste says the Government "don't have an answer" on how to stop a banking duopoly between AIB and Bank of Ireland.

Speaking to a private Zoom conference held by Goodbody Stockbrokers this week, attended by a number of representatives from banking, investor and finance bodies, Tánaiste and Minister for Enterprise Leo Varadkar said  although they had discussed the issue at Government, they haven't found a solution.

KBC is the second major bank this year to announce it is leaving Ireland after Ulster Bank owners NatWest said last month they will be closing up shop too.

The upheaval in the sector has led to repeated calls from politicians for a solution to take on AIB and Bank of Ireland in the interest of competition as they buy up the loans of those exiting the market.

"That's a good question and we have those conversations in Government as well, but we don't have an answer to that yet," Mr Varadkar said.

"It is a real shame what's happening is happening – that Ulster Bank is leaving and KBC too.

There is a misconception I think among a lot of people in Ireland that banks are these massive institutions making huge amounts of money, and that might have been true 12 years ago – it's not true anymore.

"Ireland is actually not an easy place to bank in, your clients will understand that better than most, return on capital in Ireland is not what it might be elsewhere, that's linked in part to the financial crisis and that we're a small market, and linked to the fact that for political or cultural reasons it's very hard to repossess property if people don't pay back their debts.

If any good can come of this, it might help reset the public understanding of the banking situation in Ireland.

"It's the same for insurance companies, it's not a case that they're crowding into Ireland, to make a quick profit, that's not the case at all, they're leaving in fact.

"Maybe sometimes these things have to happen for us to reset the public conversation.

"It may not have to happen, but as they have happened, it's a chance to rest the public conversation," Mr Varadkar said.

"I do think there is scope for competition but rather than coming from a retail bank or banking force in a traditional sense, maybe it is online banks providing competition with AIB and Bank of Ireland with charges they impose."