Ulster Bank is set to shut the doors to new customers for a host of its banking products later this week, as it enters the next stage of its departure from the Irish market.
The bank first announced that it would exit the Republic back in February, although it had been signposted some time in advance of this date. Thus far, banking customers haven’t had to do much, unless it was at their own behest.
From Friday however, the bank will start pulling back services to new customers, as well as tightening the ones it offers existing customers, as part of its retrenchment.
What’s happening at Ulster Bank now?
This Friday, October 29th, marks another step in the gradual withdrawal of UK bank Ulster Bank from the Irish market.
So far, from a personal banking perspective, Ulster Bank has confirmed that its non-tracker mortgages will transfer to Permanent TSB, alongside 25 of its physical bank branches. AIB is understood to be in discussions with the bank to acquire its €6.5 billion tracker loan book.
Following its announcement in February that it would exit the Republic of Ireland market, the bank stopped serving new business customers during the summer. Now it has extended this to a host of personal banking products.
As of close of business on Friday, you won’t be able to open a new savings account, current account, credit card or loan with the Royal Bank of Scotland-owned bank.
The bank is keen to stress that “customers’ existing products with us are not affected right now”.
“We will notify customers of any changes to them and any action they need to take when necessary,” a spokeswoman says. However, existing customers may now need to give serious thought to switching as the bank continues to wind down its Irish operations.
Current accounts
From this Friday, however, you will no longer be able to open a current account, even if you are already an Ulster Bank customer; for applications submitted ahead of October 29th, the bank will allow 28 days for the account opening process to be completed.
When it comes to direct debits and standing orders on existing accounts, a spokeswoman says that Ulster Bank customers do not need to take any action.
“Everything remains in place as normal,” she says.
However, Brendan Burgess, founder of askaboutmoney.com, says that the time may have come for current account holders to take action.
Noting that the bank has a reported 500,000 current account holders, if another bank doesn’t acquire these en masse – and technical and regulatory challenges may mean this doesn’t happen – customers who wait it out may find themselves switching with hundreds of thousands of other customers at the same time.
Better perhaps to switch now, and run two accounts concurrently to ensure that all your banking arrangements have transferred satisfactorily before you have to close your Ulster Bank account.
“Don’t leave it to the last minute,” says Burgess, “there could be a flood of people looking to move.”
Deposits
The bank will also no longer accept deposits from new customers. And there is a slight but important change for existing customers.
If, for example, you have money in a fixed-term account, you may need to take action sooner rather than later. According to the bank, deposit accounts that are due to roll over after October 29th will not do so. Rather, “your balance plus any interest earned will be transferred to your nominated account”.
So, get ready to hear from the bank in advance of this date and start thinking about where you’re going to transfer these savings.
“Customers will receive a separate communication about their account prior to the maturity date,” says the spokeswoman.
Mortgages
The bank will also close its mortgage lending arm to new customers from Friday. But you will still be able to apply for a mortgage with the bank if you are an existing customer, or have loan approval in principle, before this date. Existing customers will also be able to top up their mortgage or extend the term of the loan for the foreseeable.
Similarly, mortgages that are in the process of drawdown as of this date will continue to completion.
It is expected that the bank’s mortgage book will transfer to Permanent TSB (non-tracker mortgages) and AIB (tracker book), which means that if you go ahead and draw down a mortgage with the bank, it will transfer in time to Permanent TSB (PTSB) – given that tracker mortgages are no longer an option available to Irish homeowners.
Of course a caveat here for those with loan approval is that mortgage approvals are typically valid for six months – and the bank’s approach may differ over this period given its gradual winding down of business. That may close off the route to you of drawing down the mortgage when you want to do so.
The bank says it will give customers with loan approval/approval in principle one chance to reapply after October 19th, but this must be done within 10 days of the loan offer expiring.
Friday’s decision is unlikely to lead to any great shift in consumer behaviour however, as the changes have been in train for some time.
Mortgage broker Michael Dowling says that Ulster Bank has "not been considered by brokers or borrowers to any real extent since the announcement was made of their departure". By signalling last July that they would close to new business from October, it "effectively ended any new business going their way", he says.
There has been a pick-up in switching of late. On an annual basis, mortgage switches are up by 49 per cent in the year to August 2021, according to figures from the Banking & Payments Federation of Ireland.
Depending on what rate you are on now, you may like to consider a switch now, either to another provider, within Ulster Bank itself, or simply have your mortgage transferred to PTSB.
While tracker mortgages will retain the benefits of their product, when they transfer to a new owner (most likely AIB), those on fixed or variable rates will face the prospect of the cost of their mortgage increasing.
“The people most hard hit by this will be mortgage customers,” says Burgess, noting that many people will have originally taken out their loan with Ulster Bank as it offered some of the lowest rates and didn’t give a cash back up front.
PTSB, on the other hand, does give cashbacks. That in itself can mean higher rates, and its interest rates have anyway not been among the most competitive in the market for some years. It also offers different rates to new and existing customers.
You can currently get a two-year fixed rate as low as 2.2 per cent with Ulster Bank for example, but the best rate for an existing customer at PTSB is 2.5 per cent, and this is available only on loans in excess of €250,000.
To counter this, Burgess suggests that those who are currently on a low fixed-term rate with Ulster Bank should wait until the term ends, and then consider switching.
Those who may not be able to switch however, for reasons such as reduced income, arrears etc, should now look to fix for as long as possible with Ulster Bank.
Loans / credit cards
The bank will also close to personal loans, from both new and existing customers. The bank says that for those with an outstanding personal loan, “there is no change as of yet”.
It also means the bank will only accept overdraft requests from existing customers in “limited circumstances”, such as short-term emergency fund requirements.
Branches
Ulster Bank has 88 branches; 25 of these are set to transfer to Permanent TSB, including Shannon in Co Clare, Wilton in Cork, Buncrana in Donegal, Ranelagh, Swords and Blanchardstown in Dublin, and Eyre Square in Galway.
It is not yet clear what the future holds for the remaining branches.
A spokeswoman for the bank said no Ulster Bank branches will close this year, and “we do not anticipate closing any branches” in the first six months of 2022. This would then seem to imply that branch closures could be on the way in the second half of next year.
What about KBC Bank?
Ulster Bank is not the only bank set for a withdrawal from the Irish market; Belgian bank KBC also announced earlier this year that it would exit its operations here.
It recently sold most of its non-performing mortgages to US private equity firm CarVal, and has written to all impacted customers to advise them if their loan is included within the sale.
A spokeswoman says that "discussions with Bank of Ireland are ongoing". The bank is in talks to sell its €9 billion of performing loans to its larger Irish rival.
In the meantime, it says that it remains open for business, and has not paused applications for current accounts or mortgages. In the event of a transaction being agreed and approved with Bank of Ireland, “KBC will put in place all necessary supports for customers to assist them during the transition”, the spokeswoman says.
It's not necessarily business as usual, however. The bank "paused" applications for personal pensions during the summer for new customers and, from November 15th, will stop new applications from existing customers.
And again, there has been a switch away from the bank by customers since it said it would leave.
As Dowling notes, while customers’ interaction with the bank has been “a little different” from that of Ulster Bank, as it is still open for business, “the level of business given to them has dropped considerably”.
