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TIME IS OF the essence for Ireland’s retail banks, their customers and regulators at the moment with Ulster Bank and KBC Bank both ramping up their preparations to leave the Irish market. That much has been made clear in recent days.

In a week in which Bank of Ireland chief executive Francesca McDonagh confirmed her impending departure for Credit Suisse, a flurry of fresh announcements over the past 24 hours has capped off a noteworthy few days in the Irish banking world. 

Probably at the very top of that list is the Competition and Consumer Protection Commission’s (CCPC’s) decision to sign off on AIB’s acquisition of Ulster Bank’s performing commercial loan book, worth €4.2 billion. The deal was announced last June, shortly after the NatWest-owned lender revealed its plans to wind down Ulster Bank operations in the Republic of Ireland. But while the CCPC has now green-lit the purchase — the first of several such arrangements the watchdog is probing with Ulster and KBC Bank both heading for the exit door — it also warned about competition levels with the Irish market.

The Commission found that the sale would not itself lead to a substantial lessening of competition overall. However, it added in a statement yesterday that international evidence shows a higher concentration in banking services is likely to have a ”detrimental effect on competition, leading to poorer outcomes for business borrowers in terms of pricing, innovation and service”.

While the watchdog said it could not reverse a decision by a company to leave Ireland, it said it does have a responsibility to highlight “competition issues which arise as a result of the exit and which are likely to harm business customers and the wider Irish economy.” Clearly emboldened by the decision, AIB has followed this morning with an announcement of its own. The Colin Hunt-headed bank said it has now entered exclusive talks to purchase Ulster Bank’s tracker mortgage portfolio with a value of about €6 billion. 

We await the watchdog’s decisions on Bank of Ireland’s plan to purchase over €8 billion of KBC Bank’s performing loans and Permanent TSB’s proposed acquisition of Ulster Bank’s SME loan book. But in the meantime, attention has turned in recent weeks to current and deposit customers who hold accounts with the exiting banks. A combined one million customers are set to receive letters and emails over the coming months, giving them notice to close their old Ulster and KBC accounts, pick a new service provider and switch over their direct debits and standing orders.

It promises, according to various industry stakeholders, to be one of the more significant logistical challenges in the history of Irish banking.

Regular readers of the Morning Memo will be well aware of the concerns that have been raised in recent weeks about how prepared the likes of Bank of Ireland, AIB and Permanent TSB are to receive the flood of new customers. In March, for example, Colm Kincaid, Director of Consumer Protection at the Central Bank of Ireland, said remaining banks “are not where they need to be” in the process.

Just this morning, KBC Bank has announced it will extend the notice period for its current account customers to close their old accounts and switch providers. Having originally planned to start writing to account holders on a phased basis from the start of June, giving them just 90 days to close and switch their accounts, the Belgian bank said this morning it is “fully aware of the apprehension around the volume of customers that will be seeking to open new current accounts and the challenge to the market that presents”. Happily, KBC customers will now have six months to complete the transition once they receive notice from the bank.

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It is, however, difficult to separate the announcement from the Central Bank’s communique to the five main retail banks earlier this week. After facing questions about its handling of the process thus far and being told to “get the finger out” by the Consumers’ Association of Ireland, the Central Bank has defended its approach and, once again, restated its position on the switchover and how it needs to be handled.

In letters sent to the chief executives of the five main banks this week, the regulator also reminded them in no uncertain terms what it expects of them throughout the process. The letter warns the regulated firms that the Central Bank will “intervene to the full extent” of its powers if they don’t execute requests in a “timely way” to ensure continuity of customer service.

The Central Bank said it will also set up a steering committee with the five chief executives to manage the process. “We are assertively supervising the banks to ensure they prioritise the interests of customers and prospective customers throughout this unprecedented volume of account migration,” Derville Rowland, Director of Financial Conduct at the Central Bank, assured the public in a statement on Wednesday. “I acknowledge the unprecedented scale involved, and also acknowledge that staff within the banks are working extremely hard in challenging circumstances to provide customers with the services they require,” she added. “But while recognising the challenge an exercise of this scale represents, it is also clear that, in terms of the banks’ overall plans, more needs to be done.”

But while the intervention will be welcomed by consumer advocates and other stakeholders, its tone suggests a surfeit of hurdles are yet to be jumped.