Minister for Finance Paschal Donohoe has said that he was informed about possible sale of parts of KBC to Bank of Ireland in two telephone calls from the chiefs of both banks at 9pm on Thursday.
This was another “very significant development” for the Irish banking sector, he told RTÉ radio’s Morning Ireland.
Mr Donohoe added that he recognised how difficult it would be for staff at KBC bank to hear the news this morning, and in this way.
From the consumer’s point of view, there was no need for any existing customers to do anything as all their rights were fully protected in any scenario.
While KBC’s decision to leave the Irish market was “regrettable”, it did not come entirely as a surprise to him as many big banks were leaving smaller markets internationally as they were no longer profitable for them. KBC had indicated to him earlier in the week that they could be making moves in this direction, he said.
Competition
The Minister said that competition would remain strong between the domestic banks even if KBC exits Ireland. The existing large banks were well capable of serving the market, he added.
There will now be just three major retail banks in the Irish market - AIB, Bank of Ireland and Permanent TSB.
With two large banks (AIB and Bank of Ireland) and a third bank getting bigger, they would continue to provide choice and competition for consumers, said Mr Donohoe. There were also non-bank lenders who did not have branches in the country, but provided different services in different ways.
As the process between KBC and Bank of Ireland unfolds with regard to non-performing loans, options would be examined, he said, but anyone who ended up owning those loans would have a responsibility to deal with those borrowings under the terms of the contracts.
The Minister said the matter was a commercial decision for the banks and his key concerns were around competition and protection of consumers.
