Belgian-owned bank KBC Bank Ireland (KBC) announced early last month that it was in talks to sell its €9bn of performing (operating as per its terms and conditions) loans - mainly mortgages - to Bank of Ireland.
The bank’s impaired (non-performing) loan book of €1.4bn will likely be bought by a vulture fund, but currently this is unclear.
Overall, KBC Bank intends to exit the Irish market.
Last Tuesday, KBC Bank Ireland told its 1,300 staff by email that they will remain secure in their jobs until at least the end of October 2021.
The bank did not provide any clarity on whether the staff will transfer with the planned loan book sales.
KBC Bank stated: “… this commitment will continue to run thereafter, until such time that both the transactions have been signed by all parties and have received full regulatory approval, or until one or both have been cancelled”, likely causing huge uncertainty for existing staff.
KBC Bank continues to be open for business, but it is likely the wind-up of this bank may happen sooner than expected.
In the first quarter of 2021, the bank increased its market share of new mortgage lending to 13.8%, up from 12.6% for 2020.
It also opened 9,600 new current accounts, a 2% increase.
Farming current and deposit accounts
If you hold a KBC Bank farming current account with an overdraft, which is operating normally (in credit for at least 30 days over 12 months), it is likely these accounts will transfer to Bank of Ireland when the due diligence has been completed between the two banks.
KBC Bank is obliged to give all customers two months notice before this happens. If you do not wish to have your account transferred to Bank of Ireland, and operate an overdraft, you have time to make arrangements to open an account with another bank and apply for the same overdraft.
To do this, you will need to provide your chosen bank or credit union with proof of ID (passport or driver's licence) and address, together with six months of statements.
Ask your new provider for their ‘switching pack’, which will have all the details you require.
Existing mortgages with KBC Bank
All existing KBC Bank performing mortgages will likely transfer to Bank of Ireland (subsequent to agreed due diligence and regulatory approval).
If you are happy for this to happen, you do not need to take any action.
All the terms and conditions of your existing mortgage will remain the same, whether on a fixed or variable rate.
If you have a tracker mortgage and decide to switch to another lender before the KBC Bank loan book sale, you will lose your tracker rate, as this rate is no longer available in the market.
If your tracker rate mortgage is sold as part of the loan book sale, your mortgage will transfer to Bank of Ireland and you will retain your tracker rate.
What will happen with my non-performing loan? I am in arrears but have an arrangement in place with KBC Bank.
It remains unclear what KBC Bank’s intention is with regard to these loans. According to the bank, it is "reviewing its options".
It is quite likely this loan book will be sold to a vulture fund.
Regardless, all existing terms and conditions of these loans will be upheld, and all customers will be afforded all the relevant regulatory protections as per the Central Bank of Ireland.
KBC Bank will continue to provide all existing bank services in the short term, with no immediate action required by customers and farmers.
Nonetheless, it is obvious the bank is progressing its plans and so should its customers - especially if you do not want your banking to move to Bank of Ireland as part of a loan book sale.