KBC Exiting the Irish Market

[MrEarl]

I think we should be giving our Regulators and Legislators a very big thank you, for protecting us from all of these nasty Banks. Just super stuff, for Irish consumers

Between the Regulator (Central Bank) imposing excessive capital requirements on Banks, and our Government failing to properly legislate for dealing with the eviction of those who don't pay their mortgages, dodgy cashback offers etc., they'll have run every Bank out of the county, or else into the ground, before they are done!

 

[SPC100]

So what are we going to do?

 

[jpd]

Do you mean apart from paying extra interest on loans and higher fees?

 

[time to plan]

So what are we going to do?

Complain a bit on an Internet forum.

 

[blackdog]

The ECB have a digital euro in the pipeline, so the days are numbered for banking as we know it, and these moves by privately owned banking firms make total sense.

Long term, everyone will have an account with the ECB with an app for deposits and loans. Most people will think this is great. The digital euro will allow all transactions to be centrally tracked - negative interest will also be a lot easier to apply.

Worth having a "google" of "digital euro" if you're sceptical - also have a look at what the People's Bank of China are doing.

 

[NoRegretsCoyote]

Long term, everyone will have an account with the ECB with an app for deposits and loans.

The ECB will never grant loans or accept retail deposits.

 

[Ciaran6410]

So should we fix our mortgage rates now?

 

[blackdog]

The ECB will never grant loans or accept retail deposits.

"This report examines the issuance of a central bank digital currency (CBDC) – the digital euro – from the perspective of the Eurosystem. Such a digital euro would be a central bank liability offered in digital form for use by citizens and businesses for their
retail payments. "

"Depending on its
characteristics as a form of investment, it might induce depositors to transform their
commercial bank deposits into central bank liabilities. "

Straight from the horses mouth: https/www.ecb.europa.eu/pub/pdf/other/Report_on_a_digital_euro~4d7268b458.en.pdf

As they say on twitter - "remind me of this"

 

[NoRegretsCoyote]

Such a digital euro would be a central bank liability offered in digital form for use by citizens and businesses for their
retail payments. "

From the same report:

While the Eurosystem would always retain control over the issuance of a digital euro, supervised private intermediaries would be best placed to provide ancillary, user-facing services and to build new business models on its core back-end functionality. A model whereby access to the digital euro is intermediated by the private sector is therefore preferable.

Essentially what they are talking about is virtual cash with the service provided by e-money providers.

Millions of EU citizens will never have bank accounts with the ECB, nor will it issue ever issue loans.

 

[peemac]

As a KBC customer last month my mortgage direct debit changed to Pheonix 7 from the regular KBC, this was reported on in the independent. I received a text message saying it was just an error and nothing was unchanged, but I wonder if this was the bank engineering towards the sale. If they have secured 33k mortgages and raised cash by selling an RMBS on the bank of it, that would mean that these mortgages couldn't be transferred to BOI unless BOI just becomes the servicor i.e. the collector of the payments?

From research by this publication, it appears that there are 33,000 mortgages worth €5.9bn that were bundled together, securitised and called Phoenix 7. In what is a highly technical piece of financial engineering, KBC Bank Ireland ownership of the mortgages transferred to another entity within the wider KBC Group.



Details on the RMBS

https://www.fitchratings.com/research/structured-finance/phoenix-funding-7-designated-activity-company-24-02-2021

My mortgage is with a phoenix securitization. Has been for many years.

This is their 7th securitization. It's actually mentioned in the terms and conditions that they can do this.

Seems it's a fairly standard thing that banks do.

 

[AJ1]

How long do you think it will take KBC to exit? Will bank of ireland have to keep the same terms and conditions?

I'm due to finish a 3 year fixed rate later this year with kbc and was thinking of doing another 3 year fixed or maybe 5 year fixed and overpay as much as possible. . could look at switching but font think it will be possible for us. My income has reduced over the past few years due to now working part time and we now have 3 children.

 

[skrooge]

You have to love the press release

KBC Ireland

KBC Ireland

www.kbc.ie

It has "intention to explore a route that could potentially lead to" which sounds as non-commital and vague as you can get.

I would have thought you've time to refix. If you're in doubt why not call them and see what the break fee would cost to break and refix now.

If you're concerned about not being able to switch and the potential risk of rising rates KBC do offer good short term fixes.

 

[NoRegretsCoyote]

It has "intention to explore a route that could potentially lead to" which sounds as non-commital and vague as you can get.

It's drafted by the lawyers.

Presumably they have to disclose a minimum of information but can't be definitive until the due diligence is done.

 

[Brendan Burgess]

I have an opinion piece in today's Irish Times

Exits of KBC and Ulster Bank leave other banks free to hike rates

Mortgage market must be more attractive to foreign lenders

www.irishtimes.com

Least worst​

While Irish banks have a lamentable record in their treatment of customers, the two banks who are leaving are the least worst. Neither discriminated between new and existing customers. Whatever rates they offer to new customers, they also make available to existing customers. So, when KBC reduces mortgage rates to attract new business, their existing customers benefit from such a move.

Bank of Ireland and PTSB have separate rates for new and existing customers. If a Bank of Ireland customer wants a competitive rate, they must switch to another bank. But most customers are too busy or too lacking in financial knowledge to undertake the arduous job of switching to another lender.

...

The Government needs to take radical action to make the mortgage market more attractive to foreign lenders. They must ban cash backs immediately and they must reform the legal system so that any lender considering entering the Irish market can be sure that they will be able to get their money back if the borrower refuses to pay.

 

[Allpartied]

I have an opinion piece in today's Irish Times

Exits of KBC and Ulster Bank leave other banks free to hike rates

Mortgage market must be more attractive to foreign lenders

www.irishtimes.com

Least worst​

While Irish banks have a lamentable record in their treatment of customers, the two banks who are leaving are the least worst. Neither discriminated between new and existing customers. Whatever rates they offer to new customers, they also make available to existing customers. So, when KBC reduces mortgage rates to attract new business, their existing customers benefit from such a move.

Bank of Ireland and PTSB have separate rates for new and existing customers. If a Bank of Ireland customer wants a competitive rate, they must switch to another bank. But most customers are too busy or too lacking in financial knowledge to undertake the arduous job of switching to another lender.

...

The Government needs to take radical action to make the mortgage market more attractive to foreign lenders. They must ban cash backs immediately and they must reform the legal system so that any lender considering entering the Irish market can be sure that they will be able to get their money back if the borrower refuses to pay.

What about a bit of responsibility on the lender.
American banks can repossess the asset fairly easily, but that is the end of the borrower's obligation.
The reason borrowers resist repossession in Ireland, is because the full loan is still due, even after the asset has been surrendered.

A change to easier repossessions, with normal safeguards for critical cases, should be accompanied by new rules which discharge the full debt once the asset is taken by the bank.

 

[NoRegretsCoyote]

A change to easier repossessions, with normal safeguards for critical cases, should be accompanied by new rules which discharge the full debt once the asset is taken by the bank.

Isn't this more or less what happens with a PIA?

 

[Leo]

American banks can repossess the asset fairly easily, but that is the end of the borrower's obligation.

Yeah, but if you're looking to go over 80% LTV expect to pay private mortgage insurance that can cost 2% of the total loan value pa.

 

[Brendan Burgess]

American banks can repossess the asset fairly easily, but that is the end of the borrower's obligation.

This is a common misconception. It applies in some states but not all states.

And rates are much higher and LTVs are much lower in those states which have non-recourse mortgage lending.

The vast majority of Irish borrowers are responsible.
We want to pay our mortgage even when it's a struggle.

We don't want to pay an additional 2% and be obliged to get a 30% deposit because a small minority want to borrow the money and not pay it back if the value of their property falls.

Brendan

 

[Allpartied]

This is a common misconception. It applies in some states but not all states.

And rates are much higher and LTVs are much lower in those states which have non-recourse mortgage lending.

The vast majority of Irish borrowers are responsible.
We want to pay our mortgage even when it's a struggle.

We don't want to pay an additional 2% and be obliged to get a 30% deposit because a small minority want to borrow the money and not pay it back if the value of their property falls.

Brendan

As I understand it, there are a number of high population states that only offer Non-Recourse loans.

In all other states both recourse and non-recourse must be available to borrowers.

So, why not give people the choice. A higher interest rate, but knowing that only the asset will be surrendered to meet their obligations.

The Celtic Tiger crash saw tens of thousands of Irish people owing 400k or 500k on houses worth less than 100k.

It was a complete disaster for them and continues to be a disaster, 15 years later.

 

[Leo]

So, why not give people the choice. A higher interest rate, but knowing that only the asset will be surrendered to meet their obligations.

People are very poor at predicting future events that will materially affect their ability to pay. How many would take out life protection policies if they weren't forced to? How many currently opt for income protection?

The Celtic Tiger crash saw tens of thousands of Irish people owing 400k or 500k on houses worth less than 100k.

The challenge is that the option of a significantly larger deposit and perhaps a doubling of the interest rate will do nothing to protect those buyers who are buying at the very limits of affordability, as many were back in that era. Most wouldn't have come close to 30% deposits and likely couldn't have afforded the affects of an extra couple of percent on the monthly repayments.