Irish Examiner View: Ulster plan must not limit consumer choice

Ulster Bank's exit from the Irish market will greatly reduce customers' choice. Brian Lawless/PA Wire

The well-flagged expectation that Ulster Bank owner NatWest will, over a number of years, close its Irish subsidiary focuses attention on Ulster's 2,800 staff and 1.1m customers, the bank's prospective customers too.

Despite assurances about deposits, borrowing rates agreed with Ulster, and many other arrangements too, many important questions remain unanswered. One is the very real prospect of private depositors forced to find a new home for savings having to pay to deposit funds with another institution. 

How times have changed. 

However, by far the greatest concern focuses on that quaint, unicorn-rare promise — market competition leading to real consumer benefits.

Ulster holds 20% of all SME lending and 15% of the mortgage market. It has almost €22bn in retail or business deposits and a loan book almost as big. When that cake is mopped up by the main players left in the market — AIB has its crosshairs on Ulster's €4bn corporate or commercial loans — those trying to borrow will have a far weaker hand. They will have one less option in a market far, far tighter than the one once described by a former ECB president and now Italy's prime minister, Mario Draghi. He infamously characterised Irish banking as a “quasi-monopoly”.

In a society half-heartedly grappling with a decades-long, policy-driven housing crisis a new, deeper concentration of banking power may well exacerbate that shame. It will certainly make it more difficult for the Minister for Public Expenditure and Reform Michael McGrath to resolve the issue of far higher mortgage rates in Ireland than in the rest of the eurozone, a fleecing he persistently questioned while in opposition. That issue, and Mr Draghi's recognition of our loaded-dice system, raises another question, one ultimately far more important. 

There are around 115 grown-up banks in the eurozone. Every member of that coalition — subscribes, in theory at least, to the idea of a single market. But for various reasons Irish consumers — and not just for borrowings — are unable to take advantage of the options those 115 banks offer. Legal barriers around transnational sharing of credit history; the fact that so many loss-making tracker mortgages are active and huge, unresolved difficulties around repossessing a property militate against that opportunity to give consumers a real, empowering choice.

It is time we asked who those limitations really benefit... especially as the answer is obvious and will become even more so when the Ulster option is gone. That those forces driving opposition to legitimate repossessions represent a political culture that depends on social implosion is a significant argument-cum-warning too.

As is often the case, this difficulty is also an opportunity. The EU, struggling to sustain legitimacy, can help Irish consumers enjoy eurozone banking terms thereby showing that the single market is not just a promise disinterred at election time. Our Government can, if they recall the banks' scorn and dishonesty from our last crisis, help open this door to renewed, cheaper opportunity. As this would enhance the standing of the EU, silence the Irexit minority, stimulate our economy, and maybe renew faith in our politics, it is difficult to understand why this project is not nearing completion ... but then our banks are so powerful and are set to become even more so. This cannot be another kick-the-can issue, the noose is tightening and it will be far too late to regret conservatism and inaction after the next election.