As of last Friday, the third-largest bank in Ireland Ulster Bank confirmed it has decided to exit the market, but in an orderly wind-up over a number of years.
Although a very unwelcome announcement, it wasn’t unexpected, as the rumours were plentiful.
Ulster Bank has 1.1 million customers, 2,800 staff and 88 branches across the country.
Some 600 jobs in Belfast are also affected, but Ulster Banks’ Northern Ireland operations are otherwise unaffected.
Ulster Bank has a 15% mortgage market share and 20% market share of small and medium enterprise (SME) lending, therefore not inconsequential.
According to IFA analysis, about 20,000 farming customers will be affected, with a mix of loans and current account facilities.
An Taoiseach Micháel Martin stated: “As Ulster Bank is a private company, the Government doesn’t have any authority over its decision-making processes.”
An Taoiseach did confirm the Government’s support for both Ulster Bank customers and staff.
The consumer protection laws which were put in place over the last decade in Ireland allow robust, proportionate and protection to all Ulster Bank customers.
What will the closure mean for Irish farmers overall?
The closure of Ulster Bank will mean less competition in the market place.
The current high mortgage rates in Ireland may remain the same, due to a more consolidated market place and less competition.
Due to the surplus cash already in our banking system, negative interest rates may become common place.
Ulster Bank’s deposits of €20bn will need to be rehoused with other financial services.
Many of the Ulster Bank branches are likely to close. Ulster Bank account holders may need to move their banking elsewhere.
All savings are safe, as Ulster Bank is not insolvent. If you have a mortgage, the terms and conditions will not change, even if the loan book is sold on.
Both AIB and Bank of Ireland have mooted that they are considering closing branches due to the increases in digital banking and the high costs of running these branches.
Overall, the bank branch networks will reduce in Ireland.
(1) Savings account with Ulster Bank
All savings held in Ulster Bank are safe, as Ulster Bank is well funded. All savings up to €100,000 per account holder are protected by the Deposit Guarantee Scheme.
(2) Mortgages with Ulster Bank
If you hold a mortgage with Ulster Bank, you are protected under the Central Bank’s consumer protection code.
If you have a tracker rate, do not switch banks, as this rate will still apply even if your mortgage is sold to another financial entity.
If you switch, you will lose your tracker rate.
If you have a fixed-term mortgage, this rate will apply until the fixed term has expired.
(3) Farming current account with an overdraft in Ulster Bank
If you have a farm current account, you are protected under the Consumer Protection Code.
You will be given two months’ notice to make alternative arrangements with another bank.
You will need to repay Ulster Bank any monies owing.
You are also protected under the Central Bank code of conduct for switching between financial institutions.
There are many options in the market for current account holders.
(4) Credit card with Ulster Bank
You will need to repay all monies owning in advance of Ulster Bank leaving the market, otherwise your debt may be sold on.
If this happens, be sure to check out the new terms and conditions such as minimum repayment amount and interest rate.
(5) Farm loans
If you hold an Ulster Bank commercial farm loan, you will need to find an alternative lender or your loan may become part of the loan sale being considered with AIB for its corporate and medium-sized business book, about €4bn in loans.
PTSB appears interested in Ulster Bank’s smaller business and agricultural loans and a portion of its mortgage book.
For now, the best advice for Ulster Bank farming customers is do not panic and keep well informed.
Read more about the Ulster Bank exit in the Irish Farmers Journal this Thursday.