Ulster and KBC: What do I do now?

It's been a long time coming, but both Ulster Bank and KBC Bank are now entering their final months in Ireland. It's an unprecedented event in Irish banking: providers have come and go down through the years, but have one million account holders ever needed to move at the same time before?

Ulster Bank has started writing to its customers telling them that they have six months to get their affairs in order by switching to a new provider and transferring any funds out of their existing Ulster Bank accounts.

It’s not yet clear how many customers have already moved, as the bank says it’s too early to release closure statistics, although it will do so in the future. That would suggest precious few have made the jump yet.

In any case, it is likely that, by October of this year, most of the bank’s near 700,000 current and deposit account holders should be banking with a new provider.

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KBC Bank is not far behind. After an early misstep, in which it said it would give customers only three months to close their accounts, before getting a slap on the wrist from the Central Bank, the Belgian-owned bank says it will now give customers six months notice to organise their affairs. With the bank expected to start writing to its customers as of June 1st, this means most of its 130,000 current account holders will likely be banking with someone else by early 2023.

Giving customers adequate time to move is an important concern. While, under the Central Bank Consumer Protection Code, banks only need to give customers two months’ notice when closing a line of business, in practice this may not be enough.

So, if you’re a KBC Bank or Ulster Bank customer, what exactly do you need to do and by when?

Current accounts

Almost half a million current account customers will have switched bank accounts by the end of the year.

Last month, Ulster Bank started writing to its 360,000 personal current account customers telling them that it was time to start thinking about moving. With the six months’ notice, this indicates that some customers will be expected to have left the bank by some time in October of this year.

KBC Bank will start writing to its 130,000 such customers from June 1st, giving them six months to close their accounts. These letters will be rolled out over the course of this year and into 2023, the bank says.

It says it will continue to provide reminders to customers during this period, through a combination of letters, emails and SMS messages.

Of course there is no need to wait until you get your letter. Best perhaps to start looking for a new home for your money now. You can check out the Competition and Consumer Protection Commission's current account comparison here.

While Revolut is not included on the list, it should be noted that it will shortly operate in Ireland (from July 1st) under its Lithuanian banking licence.

Typically you will need to have your new account up and running before you can close your old one. For those who bank online, you should be able to do this via your web-banking app.

KBC says it won’t penalise you for having two current accounts open at the same time: once it issues notice on your account, it will stop charging maintenance fees.

Miss the deadline?

If you fail to close your account before the six-month window expires, don’t worry, you won’t lose your money. You will, however, face a bit of a banking nightmare as all your payments and direct debits etc won’t be accepted. Ulster Bank says your account will be frozen, and within a month of this, a cheque will be issued for the account balance, less any fees, stamp duty etc payable. (Better make sure, then, that your new current account will cash cheques!)

KBC Bank says accounts will automatically close after six months, and where there are funds left in accounts once the deadline has passed, it will write to customers advising them as to how the funds can be accessed.

Savings

As with current account customers, Ulster Bank has written to its savings-account customers to tell them that they must close their savings account before a certain date (typically six months from the date of the letter, so likely before the end of October 2022).

Before you close this account, you will need to have identified an alternative home for your deposits. Interest rates may be negligible but it may still make sense to choose the account offering the best return. You can check out the Competition and Consumer Protection Commission website to choose the best account. Remember, if you have more than €100,000 to put on deposit, you will need to split providers to ensure that all your money is covered by the Deposit Guarantee Scheme.

Once you have a home for your savings, you should be able to close your account via your web access, inputting details of the new account to which the funds should be transferred.

Closing an account may be a bit trickier if it is held on behalf of a child; if the child is under 18, for example, the signatures of both parents, and the child, will be required.

Finally, remember if you end up getting less than you thought into your new account, that Dirt (Deposit Interest Retention Tax) will be paid at 33 per cent on any interest earned up to the date the money is transferred.

If you have an outstanding mortgage with either Ulster Bank or KBC, you won't need to do anything over the coming months as your mortgage will simply transfer to a new provider

With KBC Bank, it's a little bit different. The bank has signed an agreement with Bank of Ireland for it to acquire its deposits (but not current accounts). This means that, assuming this agreement meets regulatory approval etc and goes ahead, your savings will automatically transfer to Bank of Ireland, which means that you won't have to do anything.

If you want to close your account proactively and move the deposits elsewhere, you must write to KBC Bank informing them of this.

Miss the deadline?

If you don’t close your account within the time frame allowed, expect a cheque in the post. Ulster Bank says your account will be frozen once the deadline has passed and cheques for any remaining balance issued.

Existing mortgages

If you have an outstanding mortgage with either Ulster Bank or KBC, you won’t need to do anything over the coming months as your mortgage will simply transfer to a new provider.

Fixed and variable rate customers with Ulster Bank will see their mortgages transfer to Permanent TSB, as part of the departing bank's sale of its €7 billion performing non-tracker residential mortgage book. It's expected that these mortgages will start to migrate to PTSB between the last three months of this year, and the first quarter of 2023.

Ulster Bank recently indicated that AIB is in talks to acquire its €6 billion tracker mortgage book, containing about 40,000 mortgages.

Most of KBC’s mortgage customers will see their loans transfer to Bank of Ireland; if you have a non-performing loan with KBC, your mortgage will already have been transferred to Carval, and is being serviced by Pepper. You should have been informed of this already.

Mortgage applications

If you are applying for or drawing down a new mortgage, then separate deadlines may apply.

With Ulster Bank, if you have an approval in principle in place prior to April 29th, you will be able to use this to buy a home and draw down a mortgage provided you do so within the timeframe stated on the letter. Once the approval in principle extends beyond that date, however, the offer will be withdrawn and won’t be extended.

If you have a personal loan with Ulster Bank, you're unlikely to find out what's going to happen to it until next year as the bank says it will write to such customers in 2023

If you are an Ulster Bank customer, and you want to apply for a mortgage, you can do so up until June 10th. Similarly, if you have an offset or tracker mortgage with the bank, and you want to either move home or top up your mortgage, you can do this until June 10th.

KBC says it is still accepting new mortgage applications and will give 30 days notice if and when it intends to stop. Remember even if you successfully apply to KBC, your mortgage will likely end up being transferred to Bank of Ireland down the line.

Personal loans

If you have a personal loan with Ulster Bank, you’re unlikely to find out what’s going to happen to it until next year as the bank says it will write to such customers in 2023. It may be the case that these loans will transfer to another provider, but it’s not yet clear.

With KBC Bank, Bank of Ireland has agreed in principle to acquire these loans; if this deal goes ahead, that’s where these loans will transfer.

Miss the deadline?

If you have a loan contract with a bank, while the loan can be sold to another provider or the bank can ask its customers to pay it off early, it can’t force them to do so.

Credit card

If you have a credit card with Ulster Bank, you’re currently under no obligation to move it. However, as with other accounts, it’s only a matter of time before you’ll be asked to move, so it may be in your best interests to start moving it now. The bank says that it will start writing to credit card customers “later this year”, giving them six months notice to close their accounts. Once this six months period expires, you will no longer be able to use your card.

Ideally, the bank says you should “clear your balance as soon as you can”; if you are unable to clear this balance, either through your own funds or by switching the debt to another credit card provider, Ulster Bank says that it has a dedicated online facility to help customers who may need support.

Again, KBC customers may not need to do anything – unless they so wish– as their credit cards will likely transfer to Bank of Ireland.