Spanish bank rules out entry into Irish mortgage market

Bankinter ‘for now’ to operate as ‘consumer credit entity’ under Avantcard brand name

Spanish lender Bankinter has ruled out moving into the Irish mortgage market, at least in the short term.

The news will dampen expectations that it would link up with An Post to offer cut-price loans to property buyers. And following an announcement from semi-State company last week that it wants to move into the mortgage market by undercutting the existing offering by as much as 1 per cent, speculation had been mounting that it would partner with Bankinter.

The Madrid-headquartered bank, Spain's sixth largest lender, acquired Irish credit card and personal loans provider Avantcard last week for an undisclosed sum.

Bankinter was regarded as an obvious potential partner for An Post, given that Avantcard already operates a credit card partnership with the State-owned postal group. The Spanish lender offers mortgages fixed for 20 years at a rate of just 1.99 per cent in its home market,


However, a spokesman for the Spanish bank said its goals in moving into the Irish market are firmly concentrated on smaller personal loans.

“At this time, Bankinter is not planning to set up commercial banking operations in Ireland as it has in Spain,” it said. “For now, we will only operate as a consumer credit entity, with Avantcard’s brand name and employees.”

It added that in acquiring Avantcard, “we are moving hand-in-hand with this entity into the Irish consumer credit market (personal loans and credit cards), a business we are promoting considerably in Spain through our consumer credit subsidiary, Bankinter Consumer Finance”.

Its goal is to build on these consumer credit operations in Ireland under the Avantcard brand. It plans to set up certain consumer credit operations that have been performing well in Spain and do not exist in Avantcard, such as credit card lending through partnerships and “other types of data analysis and risk management practices in which we are specialised”.

Mortgage shake-up

While Bankinter may be “out” for now, it emerged over the weekend that Finance Ireland, a non-bank lender backed by the Ireland Strategic Investment Fund, is set to announce plans to move into the mortgage market over the coming months.

Finance Ireland was founded by former Permanent TSB boss Billy Kane. It already provides motor, SME and agri-leasing loans and will distribute mortgages through the broker market.

If this initiative takes root, and An Post moves forward with its plans, then there could be two additional players in the Irish mortgage market next year. Credit unions are also ramping up their offering, with the Central Bank set to launch a consultation process in the coming weeks on lifting the lending cap that applies to them.

Local authorities have also become active players in the market, following the introduction of the affordable home loan scheme last year. This offers cut-price lending rates, starting at just 2 per cent fixed for 25 years, for those who qualify for the affordable loans.

Nonetheless, despite the uptick in competition, Irish mortgages remain far more expensive than their European peers, at a differential of around 1 per cent.

Fiona Reddan

Fiona Reddan

Fiona Reddan is a writer specialising in personal finance and is the Home & Design Editor of The Irish Times