Seven banks have abandoned the Irish market. There are only three left.
KBC Bank has announced it is leaving the Irish market. Ulster Bank is also leaving. Bank of Scotland, Irish Nationwide, Danske Bank, Anglo Irish and ACC Bank are long gone. With seven banks gone, there are now only three retail banks left in the country.
We have a worsening problem with competition in Ireland. For a very long time banking, insurance, retail and energy providers were dominated by UK providers. With Brexit, their commitment to this market is reduced. Unfortunately free market competition won’t always solve the problem, the Irish market is too small and not profitable enough to attract new competitors in many sectors. It was different when we were effectively part of the UK market. No Government agency currently has a mandate to ensure Irish consumers are offered continued choice through new competitors and forward looking market analysis.
The Consumer and Competition Protection Commission (CCPC) makes no mention on its website of the loss of KBC or the steady stream of Bank departures over the last years even though competition is clearly being reduced. This is possibly because the CCPC does not have a forward-looking mandate to ensure that markets attract new players to compete for the benefit of consumers. The CCPC mandate is to protect consumers from existing players in the market, approve mergers, deal with complaints, and make sure consumer protection regulations are followed. It is unfortunate, but the fewer competitors there are in a market, the fewer problems the CCPC are likely to have to deal with.
The only new banking entrants Ireland is likely to see are online banks such as N26. However, the CCPC warns “there are also drawbacks to this type of service, such as being uncertain if they are regulated by the Central Bank of Ireland”. It is of course entirely legal for Banks operating in Ireland to be licenced by other European Central Banks, N26 for example is regulated by the German Central Bank. I believe our Regulators could be more encouraging and supportive of new entrants to the Irish market.
The real problem here is Political, the CCPC doesn’t have the powers or the mandate to encourage new competitors to any market, powers it should have. Market failure is currently not the CCPC’s problem, but it is a growing problem for consumers.
That is why we at OneBigSwitch.ie continue to do our best to bring new competitors to the Irish market and increase choice for all our members.
Has the loss of seven banks over the last years affected you? Where else are you seeing lack of competition in the market? Do you think a lack of competition has increased prices or reduced service? Share your experiences below.