Q&A: What does the sale of KBC’s loan book mean for me?

Bank of Ireland is to acquire all of the performing loan assets and deposits of KBC Bank Ireland for about €5 billion as the Belgian lender continues to wind down its Irish operations ahead of its exit from the market. Here, we answer a consumer's questions on the deal.

What is happening with KBC Bank?

As you may have heard in the media, the bank is preparing to exit the Irish market, and so an agreement has been reached where Bank of Ireland would acquire substantially all of KBC Bank Ireland's performing loan assets.

This includes performing mortgages, commercial and consumer loans, as well as deposits and a small number of non-performing mortgages.

Okay, I see. I am a customer with the KBC. Is there anything I need to do?

You do not need to take any immediate action as the agreement remains subject to all the relevant regulatory approvals.

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KBC has said it will communicate to you well in advance of any actual steps or changes that may be taken in respect of your products, giving plenty of notice in line with all legal and regulatory protections.

Fair enough. What exactly is going to be affected though?

KBC has paused new applications for Personal Retirement Savings Accounts (PRSAs) for non-customers and will pause applications from KBC customers from November 15th.

In addition, KBC will pause applications for investments and personal overdrafts from December 7th and will contact customers to provide them with at least 30 days written notice of this change.

If you are an existing customer of these products there is no immediate impact for you today and you can continue to manage and make changes to your PRSA, investment or personal overdraft as normal, before the above dates.

What if I want to open a current account?

KBC said it will continue to accept new applications for current accounts, mortgages, deposits, personal loans, life, home and car insurance and personal credit cards.

All of its hubs, its contact centre, and digital channels will continue to operate as normal, and the bank said it “remains open for business”.

I have recently completed a mortgage application with KBC. Is that all up in the air now?

KBC has said it is processing new mortgage applications as normal. Therefore, you can continue to proceed with your mortgage application through any KBC channel or your mortgage broker.

Should the agreement with Bank of Ireland receive regulatory approval, your mortgage will transfer to Bank of Ireland at a future date. If you apply for a mortgage with KBC you will continue to be afforded all the relevant legal and regulatory protections.

That’s good news. However, one of my parents has a KBC pension and is worried about these developments. What should I tell them?

For now, they do not need to take any action. PRSAs are long-term plans to help people set aside money for retirement.

Should the agreement with Bank of Ireland receive regulatory approval, they will be required to transfer their PRSA to another provider on a given date in the future.

The transfer value of their PRSA/KBC pension at that date will have no penalties or charges applied.

Based on the performance of the fund, this could be more or less than the contribution(s) they have made. Within the KBC app they can view their balance and pension performance anytime.

You keep mentioning ‘subject to regulatory approval’. Does that mean there’s a chance this none of this will happen?

You’re right. All of this will have to clear the normal checks and balances that are in place to ensure everything is above board. That includes a full stage-two investigation by the Competition and Consumer Protection Commission, although KBC has said it is confident the deal will go through.

I have a friend working with KBC. Should they be worried about their job?

KBC said it has been “very focused” on the welfare of its employees throughout the process, and that it “remains acutely aware” of the need to maintain open lines of communication with its staff and to provide “as much certainty as possible”.

Take from that what you will, but it recently engaged in a redundancy consultation process with its employee council, “resulting in strong terms that compare very favourably in the sector”, according to the bank itself.

The reality is that some staff will take a redundancy offer, some will move to Bank of Ireland with their clients or portfolios, while others will move altogether.

Okay, thanks. One more thing. Do I need to be worried about fraud following this announcement?

Fraudsters may attempt to exploit the situation by claiming to be KBC and that you need to register your details, or re-register your information. If you experience any suspicious activity – text, email or phone calls – you should call KBC’s customer service team.

Be aware of fraudulent callers pretending to be from KBC and calling from numbers that may look legitimate.

KBC will never request sensitive information like passcodes or online banking details over the phone, by email or text.