KBC Bank Ireland will start to give its current account customers 90 days' notice to close their accounts from June 1st, it said on Tuesday, as the Belgian-owned lender advances plans to exit the Republic.
The bank will contact various groups of customers on a phased basis, it said. KBC has 130,000 current account holders, while its €4.4 billion deposit book remains on track to be transferred along with its €9 billion of performing loans to Bank of Ireland, subject to approval of that deal from competition officials.
KBC Bank Ireland will brief industry participants on details of its plans on May 5th, to ensure that they “can be properly prepared”.
The notice period is half of the six-month warning that Ulster Bank plans to start giving its customers within the coming weeks to find alternative homes for their current and deposit accounts.
Ulster Bank has 360,000 active personal current accounts, 300,000 active deposit accounts and 70,000 business accounts.
Banks in the Republic are required under the Central Bank Consumer Protection Code to give a minimum of two months' notice to customers when closing down lines of business.
Responsibilities
"KBC Group, the board of KBC Bank Ireland and the executive committee of the bank are fully conscious of our responsibilities to our customers and colleagues in KBC Bank Ireland," said Alex Blazek, chief executive of the Irish unit, who is stepping down from his own role in May after less than a year at the helm. "We fully understand the role we have played within the Irish banking system, and we are fully committed to meeting those responsibilities as we exit."
The biggest movement of current and deposit accounts in the history of the State comes after the last two overseas-owned banks standing after the financial crisis announced last year that they were quitting the market.
The main concern is around the handling of the opening of current accounts with new providers, together with their attending direct debits, standing orders and regular payments.
Even in cases where existing direct debit arrangements can move in theory under a Central Bank switching code, many direct debit originators and receivers will only take instructions directly from their customers, according to banking industry officials.
Minimising disruption
The Central Bank's director of consumer protection, Colm Kincaid, told the Oireachtas joint finance committee two weeks ago that exiting and remaining banks "are not where they need to be at this stage" in terms of managing the process.
A spokesman for Bank of Ireland, one of the remaining lenders in the market, said last week that “minimising disruption for customers who will be changing banks will also require the collaboration of multiple stakeholders across the economy, including utility companies, government departments and agencies, and employers”.
A spokesman for KBC Bank Ireland told The Irish Times last week that current account customers with overdrafts will be given additional time to secure credit elsewhere.
“These customers will be provided with 120 days’ notice to reflect the fact that they may have to go through an application process with another provider,” he said.
“Where a customer is not in a position to repay their overdraft, KBC will work with customers on an individual solution appropriate to their circumstances. We have circa 7,000 customers with overdraft limits attaching to their current accounts.”
