Everything customers need to know about Ulster Bank and KBC's closure

What’s the background to the closures?

In September 2020 Ulster Bank left many people stunned when it revealed that its owner NatWest (formerly RBS) was reviewing its operations in Ireland with a closure of the bank actively being considered.

The bank had previously reviewed its operations here in 2014 with an exit from Ireland also on the cards back then. However, after much speculation, it reconfirmed its commitment to the Irish market. 

However after stumbling into yet another loss in 2020 due to the Covid pandemic, and with the bank still struggling to repay the £15 billion bailout it needed following the collapse of the Celtic Tiger property boom, its operations in Ireland once again came under the spotlight.   

And in February 2021 it seems NatWest finally lost patience as it announced it was to exit the Republic of Ireland after over 160 years. 

Ulster Bank's high cost base relative to other banks and its large (increasingly redundant) branch network didn't help things.

NatWest also has several billion in capital tied up in Ulster Bank which it can’t access as it needs to hold the money in reserve against its loans. All banks need to hold capital but Irish banks need to hold far more due to the perceived riskier nature of lending here. Closing Ulster Bank will allow NatWest to free up and access this capital and return it to shareholders. 

Meanwhile, unbeknownst to many, as Ulster Bank was announcing its intentions to leave Ireland, KBC too was looking for a way out.

KBC has been operating in Ireland for over 40 years and several years ago repositioned itself as a 'full service' retail bank, offering current accounts and credit cards along with the mortgages for which it was traditionally known.

However in April 2021 it too seemed to have lost patience with doing business in Ireland and announced that it was in talks with Bank of Ireland to sell its performing loans, which if successful, would lead to its exit from Ireland.

Has something like this happened before?

Yes. Bank of Scotland/Hallifax, Danske Bank (formerly National Irish Bank) and Rabobank (which owned ACC) have all pulled out of the Irish market over the past decade or so. And, of course, Anglo Irish Bank and Irish Nationwide Building Society both collapsed.

However customers can take comfort from the fact that in all cases the wind downs were orderly. 

Having said that, no player as big as Ulster Bank has ever left. And definitely not two banks at the same time.

Ulster Bank has around 2,800 staff, 88 branches nationwide, about 15% of the Irish mortgage market and over €20 billion in deposits. So its exit is going to have huge ramifications. While KBC is much smaller, it still has over 100,000 current account customers and over 10% of the mortgage market.     

I have a mortgage - what do I need to do?

Ulster Bank is selling its performing mortgages to Permanent TSB. In other words, mortgages where there aren't any serious repayment issues. The deal was approved by The Competition and Consumer Protection Commission (CCPC) in July. And in early November Permanent TSB and Ulster Bank confirmed that the deal had been completed.

Ulster Bank has agreed to sell its 47,000 performing trackers to AIB but AIB says it intends to engage a third-party service provider to manage the mortgages on its behalf. The CCPC recently cleared this sale in January of 2023.

Ulster Bank is working on its plans for its non-performing mortgages, in other words those in arrears, which will be announced in due course. 

If you’re an Ulster Bank mortgage customer, including those on a tracker, the most important thing to know is that your monthly repayment, interest rate and terms and conditions will all remain the same and there is little for you to worry about - for now at least. Ulster Bank will write out to you before the end of the year explaining what, if anything, you need to do.

However if you're on a fixed rate, you need to remember that when you come to the end of your fixed rate, you'll either move to one of PTSB's variable rates or one of its fixed rates for existing customers should you decide to fix again. These rates are significantly higher than Ulster Bank's unfortunately. 

For example the best fixed rate on offer from PTSB right now for its existing customers is 2.80% - but that's only for homes with a BER of B3 or higher. Otherwise it's 2.95%. Ulster Bank offered its existing customers rates as low as 2.20%.

KBC has agreed to sell its performing mortgages to Bank of Ireland and the deal was recently approved by the CCPC. At the moment it's forecast that KBC mortgage customers will transfer over to Bank of Ireland by the end of this year. By law, you must be given at least two months' notice before this happens.

Your current interest rate and terms and conditions will remain the same.

However fixed-rate customers of KBC will also potentially be faced with higher rates when they come to the end of their fixed-rate period. This is because if you want to fix again, you'll have to choose one of BOI's fixed-rates for existing customers, which are higher than the rates KBC offered its existing customers. 

KBC's non-performing loans have been sold to US private equity giant CarVal and will be managed by Pepper Finance. If you're one of these customers then you should have received communication from KBC already.

I have a current account - what do I need to do?

The deal agreed between Ulster Bank and Permanent TSB and AIB around mortgages doesn't include current accounts. Similarly, KBC's mortgage deal with Bank of Ireland doesn't include current accounts either.

So you either need to switch your current account yourself or close it.

If you have an overdraft, you'll need to clear this before you close your account. Both Ulster Bank and KBC say that where a customer is not in a position to repay their overdraft they'll work with customers on an individual solution appropriate to their circumstances. However it's unclear still what support they'll actually give.

If you have a mortgage with Ulster Bank and receive a discount for paying it back from an Ulster Bank current account, you won't lose the discount if you change your current account. Likewise if you have a mortgage with KBC and receive a discount for paying it back from a KBC current account, you won't lose the discount if you change current account after 1st June. 

Ulster Bank is giving customers six months' notice to close their accounts and is currently writing out to customers on a phased basis over the next few months and into 2023. This is to make sure that there isn't a flood of customers trying to switch provider at once. 

KBC is also giving customers six months' notice to close their current accounts and is writing out to customers over a 14-month period starting from 1st June. KBC also says that it'll waive the fees on your current account from the date it gives you your six-month notice. This means you won't be double charged if you have two accounts running at the same time.

If you don't close your account within the six-month time frame, Ulster Bank and KBC will simply close your account themselves and issue you with a cheque for any remaining money in it. 

Regardless of when you're written to, now is a good time to start looking at your options. Don't leave it until the last minute as switching over direct debits and standing orders can take a bit of time.

The good news is that there are currently nine other current account providers in Ireland so there is still good choice and opening a new account has never been easier. N26, Revolut, Bunq, AIB, Permanent TSB, BOI and An Post all now allow you to do it in minutes from the comfort of your home through their mobile apps or online banking.

However if you need to open up a joint account or have a non-EU passport you may have to open an account in person in branch and there are long appointment times at the moment.

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, a good app, access to a branch network and reward schemes also important? Do you need an overdraft? Read our article on the eight things to consider when choosing a new provider for more info.

Technically there is a current account Switching Code in place from the Central Bank that all banks must follow to make switching accounts easier, which you could use. In theory this means your new bank and old bank are supposed to work together to transfer over all your direct debits and standing orders for you and to have your new account open within 10 days. However this rarely works quite so smoothly and it can't be all done online - and in any case you'll need to update your employer, social welfare or anyone who pays money into your account yourself.

For most people the best advice is to simply open up a new current account yourself online (which should only take 10 to 15 minutes) and then transfer over your direct debits and standing orders at your leisure over the following week or two. Both Ulster Bank and KBC should be able to provide you with a detailed outline of all the payments on your account to help with this.

You can set up new standing orders yourself online through your new bank's online banking platform. Direct debits can usually be updated by ringing the relevant provider and providing them with your new account details.

Once this is done, and you're happy that your new account is fully up and running and all payments transferred over, you can request that your old account be closed. With Ulster Bank you can do this online.

Remember to leave sufficient funds in your account to cover any outstanding charges or interest that may be due. Otherwise the account won't close.

For Ulster Bank customers, another option is to pop into one of 45 participating Ulster Bank branches nationwide, where Permanent TSB staff will be on hand to help you switch. Branches involved in the initiative include Bray, Ennis, Tullamore, and Westport. While Dublin branches include Blackrock, Stillorgan, Blanchardstown and Lucan. However this option is obviously only useful if you're happy to move to Permanent TSB. 

You can compare all current account options quickly and easily on bonkers.ie right now.

Or check out this video on our YouTube channel where we discuss some of the best accounts right now.

I have a personal loan - what do I need to do?

No deal appears to be on the table to buy Ulster Bank's personal loans. Although this may change. It's expected Ulster Bank will write out to its personal loan customers in early 2023 explaining what they need to do.

Customers may be 'invited' to pay off their loan early and close their accounts. However you absolutely do not have to do this (and many won't have the money). So just sit tight and wait for further communication and continue paying your loan as normal. 

KBC's deal with Bank of Ireland does include personal loans so this is where your loan is moving to.

I have a savings account - what do I need to do?

No deal was agreed to buy Ulster Bank's deposit book. So you either need to find a new home for your savings yourself or close your account.

Ulster Bank is currently writing out to customers to give them six months' notice to close their accounts. Again, this will be on a phased basis. 

If you know where you want to put your savings, you should be able to close your account online yourself through the Ulster Bank mobile app or its online banking platform - inputting details of the new account to which your savings should be transferred. 

With interest rates at an all-time low, this may be an opportune time for you to look at investment options instead, depending on your risk appetite. See here for a list of alternative savings options.

If you don't close your account yourself in time and move your funds elsewhere, Ulster Bank will freeze your account and issue you with a cheque in the post for the money that was in it. Remember that Deposit Interest Retention Tax (DIRT), which is currently 33%, will be paid on any interest upon account closure so the full amount may not be paid out.    

As for KBC customers, its deal with Bank of Ireland does include savings accounts so this is where your money is moving to. Of course you can choose to move your savings somewhere else if you want. You'll be given a minimum of two months' notice before your savings get moved over, though likely more.

I have a credit card - what do I need to do?

In a few weeks Ulster Bank will start writing out to its credit card customers giving them six months' notice to close their accounts.

You have two options - you can switch your credit card to a new provider as soon as possible and transfer over any balance. Or you can pay off the full balance on your card (if any) and simply close your account. Remember when you close your account, you'll be charged €30 stamp duty (as it's paid in arrears for the previous year or upon account closure). So make sure you have this money in your account to pay it off or else it won't officially close.

Also, if you use your card for any recurring payments (like Netflix, M50 toll, Amazon etc) make sure you transfer these to a new debit or credit card. 

If you don't have the money to pay off your balance in time or you can't switch to a new provider, Ulster Bank says that it has a dedicated online facility to help customers who may need support.

Use our credit card comparison service to compare fees, charges and card features from all the remaining providers.

For KBC customers, as with personal loans, things are a bit more straightforward as your credit card will transfer over to Bank of Ireland. KBC will write out to you with more info over the coming months.

Bank of Ireland has said that it will honour customers' existing credit limits.

However you'll have to be issued with a new credit card and this will come with a new credit card number and PIN. So if you have your card details stored anywhere they'll need to be updated.

The interest rate on your new card and repayment terms may also be different. 

What will happen to Ulster Bank's and KBC's branches?

As part of the mortgage deal, 25 of Ulster Bank's 88 branches will transfer over to Permanent TSB.  As of 1 February 2023, 24 of these branches are open, with the Westport branch slated to open on 20 February.  All remaining Ulster Bank branches will start closing gradually from the end of this year onwards.

Most of KBC's banking 'hubs' will shut in March 2023 while its branch in Grand Canal Dock will remain open until next August to support a small number of customers who may still wish to attend a hub in-person to close their accounts. 

What will this mean for customers in the longer term?

Ulster Bank and KBC's exit is a body blow for consumers and competition in the banking sector and will likely lead to 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 needed was for two big players to exit the market and reduce competition even further. 

Ulster Bank’s exit will most keenly be felt in the SME loans sector where it provides the only real competition to BOI and AIB. However, mortgage holders, personal current account and loan customers will also be impacted. Meanwhile the exit of KBC will be keenly felt by those who valued its digital-centric approach to doing business, with the bank arguably having one of the best mobile apps and online services among the retail banks.