THE CEO OF Ulster Bank has told TDs that it will not immediately freeze accounts that are still showing a high level of activity if they are not closed by the end of the bank’s notice period. 

KBC and Ulster Bank appeared before the Joint Committee on Finance, Public Expenditure and Reform this afternoon to issue an update on their withdrawal from the Irish market.

In her opening remarks, Jane Howard told the committee that 71% of personal current account customers who received their first formal notification to close their Ulster Bank accounts in April and May have either closed or wound down the activity in their current account or left it inactive.

“We have contacted most of the remaining of these customers as a final reminder and most are reporting that they have either opened a new account elsewhere and are in the process of moving their payments to their new account,” she said.

Howard said that over the last four weeks, the bank has made approximately 10,000 calls a week and successfully contacted an average of 6,000 customers a week on these calls.

She said the majority of customers have said they have already taken action and have a new account open and have to complete the transfer of their transactions. 

“A small percentage tell us they will now take action and a very small number of customers have asked us for more time due to personal circumstances,” Howard said.

“We have now written to the vast majority of customers who need to close their account, which means almost every customer has begun their six month notice period which some more advanced than others,” she said.

According to Howard, direct debits have reduced from over one million to under 500,000 and standing orders have gone from 440,000 to 200,000, while point-of-sale transactions have dropped from 12 million to 6 million. 

She said the number of new accounts opening indicates that the supports put in place by other financial providers are working.

Freezing accounts

Howard told the committee that Ulster Bank’s closure process has an additional step built in, where customers have six months notice to choose, move and close and on or after six months, the account is frozen for 30 days before it moves to closure.

“This is an important interim step, and for some customers, may be the trigger to ensure they’re no longer reliant on Ulster Bank,” she said.

“We will also take some time to understand the account profile and what impact if any freezing the account will have on the customer. That will determine at what point an account moves forward into the closure process.”

While Ulster Bank recently extended the deadline for customers whose accounts are due to be frozen to 4 November, the committee heard that accounts will only begin to be frozen from 11 November. 

Howard said that there are around 5,400 accounts that still have some level of activity, albeit a reduced level, while 2,592 accounts have become completely inactive, and 9,271 have closed completely.

Asked by Sinn Féin’s Pearse Doherty TD how many of the remaining accounts Ulster Bank expects to freeze by the 4 November deadline, the bank’s director of corporate affairs Elizabeth Arnett said it would be approximately 1,000. 

“These are customers that have no inbound payment in, have very, very low or no balance and have had the full notice period,” she said.

“If any of those 1,000 are still reliant, even if it’s one transaction going in… if they are telling us about the reliance is still there, then we will have the conversation with them.”

Howard estimated that around 4,000 accounts, which the bank believe that customers are still reliant on based on the activity of the account, will not be frozen by that deadline.

“We’ll continue the outreach to those customers, but what we expect to happen from current trends is we will see they’re just taking a little bit longer. So as the week goes by, they’ll reduce again,” she said.

“We can see this every week. Customers go from high-active to medium-active to low-active to no activity at all, and that’s what we’re typically seeing from our customers.”

Howard also said that if customers need more support, “which may or may not mean more time, we can provide that– they just need to let us know what they need”.

“If a customer is still reliant on their account after their six months’ notice is over, we will try to make contact with them again to ensure they have all the requirements they need to complete their move to a new bank or a new service provider,” she said.

“We will not freeze or close their accounts at this time but it’s essential that these customers continue the process of moving to another service provider.”

She said if the bank freezes an account that a customer is still reliant on, it can temporarily reverse the freeze and get the account for a short time.

Overdrafts

Howard also said that Ulster Bank has been in contact with around 30,000 overdraft customers in recent weeks. 

“We don’t think they’ve got heavy reliance and we don’t think they’re in financial difficulty, but just to see if they were sorting out their accounts with another provider and if they needed any support at any time,” she said.

The bank has around 58,000 customers with an arranged overdraft, a figure that has reduced significantly, Howard said. Around 39,000 customers have an unarranged overdraft with the bank. 

She said if the customers haven’t cleared their overdraft when the six-month period comes to an end, Ulster Bank will write to them to see if they need a further 60 days either to clear the overdraft or to contact the bank if they require additional support.

“As you’ll be aware from previous conversations where we’ve helped mortgage customers, for example, we have got 200 specialist staff who their job is to help customers in financial difficulty, to see if they can restructure the debt,” she said.

KBC

CEO of KBC Frank Jansen told the committee in his opening statement that just 10% of current accounts have been closed by its customers since May, but that this is ahead of the bank’s projections. 

CEO of KBC Bank Ireland Frank Jansen speaking before the Oireachtas Committee this afternoon. Oireachtas TV Oireachtas TV

Jansen confirmed that the bank will begin the first wave of closures of inactive current accounts in December. The process will continue in four-week cycles until August 2023.

“I’m happy to report that in partnership with our customers and supported by our dedicated team, we are making progress and account closures are tracking materially ahead of our plan,” Jansen said.

Having told the committee in May that it estimated that 52,000 of its 130,000 current account holders may need to open a new account or move to a new provider, the bank has since revised that estimate down by 25% to 39,000.

Jansen told the committee that 55% of all current accounts customers have now received account closure notices, and that these notices will continue to be issued into the first quarter of next year.

He said there has been a 110% increase in current accounts with a zero balance, with an overall reduction of 26% in current account balances since May, while the number of direct debits is reducing at a rate of 3,000 per week.

“Another key indicator of activity is the level of social welfare payments being made into current accounts, that has decreased by 32% from May to September, with just 8,500 accounts remaining in receipt of social welfare payments,” Jansen said.

He also said the bank has been informed that the Minister for Finance has instructed that the ministerial order confirming his approval of the transfer of loan assets and deposits to Bank of Ireland be drafted.

“Subject to the completion of the remaining procedural steps, the transfer is anticipated to take place in early 2023,” he said.

KBC has increased the volume of staff dedicated to serving customers by 60% in its contact centre and 25% in its operations centres.

Jansen said the bank’s hubs and branches will remain open to support with switching or closing accounts until after customers have transferred to Bank of Ireland.

“We have a dedicated care team for customers who may need some extra help and support during this time. Our care team has a wealth of experience supporting customers with different needs, and continues to support vulnerable customers to the current account closure process,” he added.

All five retail banks also have dedicated phonelines in place for customers affected by the withdrawal to help them to move their accounts.