BELGIAN-OWNED IIB Bank, which has assumed the name of its parent bank, KBC, in a recent rebranding, has become the second foreign-owned Irish bank to decide not to join the State guarantee scheme.
KBC Bank Ireland (as IIB has been renamed) said that, following a €3.5 billion injection of capital by the Belgian government into its parent bank on Monday, the bank has opted not to sign up to the Irish guarantee scheme.
This follows a similar move on Tuesday by Halifax-Bank of Scotland (HBOS) Ireland, which said it would maintain "a competitive edge" by staying outside the scheme.
Savings bank Postbank, the joint venture between An Post and French bank BNP Paribas (which acquired An Post's original partner Fortis), confirmed last night that it had submitted its "acceptance deed" to join the guarantee scheme.
Of the five foreign-owned Irish banks with significant retail operations that have applied to join the scheme, two have decided not to sign up to the guarantee and two have yet to decide whether to join.
Two banks (Ulster Bank and its sister company, First Active), which are owned by British bank RBS, have said they are processing their applications to join, though they are thought to be mulling whether to follow both Halifax and KBC, and stay outside the scheme.
RBS has been guaranteed by the British government since the Irish scheme was unveiled at the end of last month and has received a capital injection of £20 billion (€25 billion) from the British treasury in a part-nationalisation of the bank.
HBOS, which was also guaranteed by the British government and received a state investment of £13 billion, also decided not to join the Irish scheme because it felt it did not need to join two schemes.
KBC said it had chosen not to join "in the light of KBC's strong liquidity and capital position, the further strengthening of this position through the agreement with the Belgian government and after having fully considered the terms and conditions of the Irish scheme". The decision was made by the Irish bank in consultation with its parent based in Brussels.
The bank said it was grateful to Minister for Finance Brian Lenihan for opening the scheme up to the bank and acknowledged "the positive effect the scheme's establishment had on the stability of the financial system".
The bank said the €3.5 billion capital injection into KBC in Belgium had pushed the bank's tier-one capital ratio - a key measure of a bank's financial ability to absorb future losses - to 10.7 per cent placing it "among the best-capitalised banks in Europe".
Ted Marah, chief executive of KBC Bank Ireland, said KBC in Belgium was a "very healthy and strong bank" and the bank felt this was adequate for Irish customers.
KBC is the fifth-largest mortgage lender in Ireland, selling about 90 per cent of its property loans through mortgage brokers. The bank has loans of about €19 billion, split 60:40 between personal and business customers.
About 10 per cent of the loan book is secured on commercial property and development.
