Monday, May 20, 2024

Major competition boost as Spanish lender to enter Irish banking market 

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The Irish banking market is set to receive a major competition boost with the Spanish bank behind Leitrim-based mortgage broker Avant Money announcing the establishment of an Irish banking branch. 

Bankinter, which is Spain’s fifth-largest lender, said the move would provide Avant Money with a full banking licence, which would allow it to offer a wider range of financial products and services here into the future.

The company said it would begin offering deposit products initially, on top of its existing offering which includes credit cards, personal loans and mortgages.

In recent years, the Irish banking market has suffered the loss of two major players, KBC Bank and Ulster Bank, with just three players, Bank of Ireland, AIB and PTSB remaining. 

In the last year, these three banks have posted record profits deriving from growing net interest income with aggressive ECB hikes allowing them to cash in on rising interest rates. 

The banks have also received sustained criticism for increasing mortgage rates while saving rates remained stagnant, with Ireland having one of the worst transmissions of deposit rates to customers out of the entire eurozone and UK. 

Welcoming the news, Finance Minister, Michael McGrath said today’s announcement “is significant for the Irish banking market,” adding that it comes as a win for households, businesses and consumers.

“In 2022, my Department carried out a review of the retail banking sector in Ireland. It recognised the need to protect competition in the retail banking market to best serve consumers’ interests. 

“Today’s announcement by a significant European Bank is also a vote of confidence in the strength of the Irish economy.”

“Today’s decision paves the way for the strategic expansion of our business,” said Niall Corbett, CEO of Avant Money.

“This is a clear commitment to Ireland from Bankinter and we look forward to bringing even more choice, value and competition to the market. It will allow us to better meet the needs of customers by further leveraging Bankinter’s innovative products and customer experience.”

“We see potential for future job creation through the expansion of our operations and offerings, contributing to economic development and employment opportunities here in Ireland.”

To establish an Irish banking branch, Bankinter said it will acquire the entire shareholding of Avant Money which was previously held by Bankinter’s subsidiary, Bankinter Consumer Finance. As a result, Bankinter will be the sole shareholder of the company in Ireland.

It will also establish a branch here and move all the assets, liabilities, rights, obligations and legal relationships of Avant Money to it.

Avant established itself in Ireland in 2012 when it bought the credit card business of MBNA. A few years later, in 2019, Bankinter bought the Avant Card business, renaming it Avant Money in 2020, the same year it began offering mortgages to Irish customers.

The lender has grown rapidly in the mortgage market since then, the company said, adding that it has a portfolio worth €2.4bn, up 53% on a year ago.

The bank currently has 200,000 Irish customers and in the first three months of the year, the Irish business posted a pre-tax profit of €9m.

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