Q&A: I am an Ulster Bank customer - what do I do now?

Daragh Cassidy of Bonkers.ie answers your questions
Q&A: I am an Ulster Bank customer - what do I do now?

The future of Ulster Bank is to be revelaed in a statement from parent company NatWest tomorrow, as calls grow for mortgage holders to be protected from vulture funds

Ulster Bank has confirmed its exit from the Irish market this morning after more than 160 years. We asked Daragh Cassidy of Bonkers.ie what that means for the bank's 1.1 million customers in the Republic.

I am a customer with Ulster Bank - what actions should I take now?

Ulster Bank has confirmed that it will exit the Irish market and will wind down gradually over a number of years, around six. So there is no need for anyone to panic or start looking to move accounts straight away. NatWest is well capitalised, is well run, and the Central Bank will ensure customers are protected as much as possible.

However current account customers will eventually need to find a new bank to deal with.

The good news is that there are currently nine other current account providers in Ireland so there has never been more choice and opening a new account has never been easier. KBC, N26 and Revolut allow you to do it from the comfort of your home through their mobile apps while AIB and BOI have vastly streamlined their processes over the past few years too.

Think carefully about what it is you value in a current account. Do you simply want the one with the fewest fees, or are things like mobile payments, an app, access to a branch network and reward schemes also important? Do you need an overdraft?

There may also be some type of campaign among the existing providers for your business. This is what happened when Halifax exited the market in 2010 and when Dankse closed its retail operations in 2013 and PTSB tried to court their business.

I have a savings account with Ulster Bank - is my money safe?

Your money is absolutely safe. The only problem is deciding where to put your savings.

As it’s now costing banks money to hold customer deposits, most banks are likely to run a mile from accepting any new savings so it’ll be interesting to see how the sector handles billions of euro in savings all looking for a new home.

Unfortunately, the closure of Ulster Bank could quicken the arrival of negative interest rates on customer deposits.

This may be an opportune time for savers to look at investment options instead, depending on one’s risk appetite. Paying down debt and topping up your pension are other good alternatives for people’s savings.

Ulster Bank is expected to exit the Irish market tomorrow after more than 160 years. We asked Daragh Cassidy of Bonkers.ie what that means for the bank's 1.1 million customers in the Republic.
Ulster Bank is expected to exit the Irish market tomorrow after more than 160 years. We asked Daragh Cassidy of Bonkers.ie what that means for the bank's 1.1 million customers in the Republic.

I have a mortgage with Ulster Bank - how does this affect me?

If you're a mortgage or personal loan customer it's likely your loan will be sold on to a rival lender already operating in Ireland or perhaps a new brand lender. However, for competition reasons, it’s unlikely that any of the larger players in the market like AIB and BOI will be able to compete for the business.

Your repayment terms and interest rate will all remain the same and there is little for customers to do or worry about. Although this might be an opportune time for mortgage holders to see whether there is better value to be had by switching to a new lender of their own choosing.

Those with a tracker mortgage will still be able to keep it and if you're lucky enough to have one, you won't find any better value elsewhere.

This is also the possibility that Ulster Bank might continue to own your mortgage and personal loan after it has closed up shop in Ireland but contract out the day-to-day servicing of your loan (statements, customer service, payment services, balance queries etc) to a specialist provider. This is what happened when the old Irish Nationwide (then Danske Bank) closed its retail operations in Ireland in 2013 and chose Pepper to manage the bulk of its loans though it also outright sold some of its loans to Pepper too.

There are talks of mortgages being sold to vulture funds - should I be worried?

No. These funds have a bad reputation in Ireland partly due to the tabloid media and politicians hyping things up and not understanding what they actually do.

A vulture fund is simply a company that primarily invests in debt considered to be very weak or in default. Your rights and obligations as a mortgage holder with a vulture fund are no different than they are with any other Irish bank or lender and you will have the same protections as everyone else under the Central Bank's Consumer Protection Code.

What could this mean for customers in the longer term?

If Ulster Bank were to take the nuclear option of leaving Ireland it would be a body blow for consumers and competition in the banking sector and lead to huge upward pressure on interest rates and banking fees in the short to medium term at least.

Ireland is already under banked compared to other countries of our size so the last thing we need is for the third biggest player to exit the market and reduce competition even further.

Ulster Bank’s exit would be most keenly felt in the SME loans sector where it provides the only real competition to BOI and AIB. Mortgage holders and personal current account and loan customers will also be impacted.

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