Hello Skrooge,
Perhaps you are forgetting that holding surplus deposits is actually costing Banks money - it's not as simple as suggesting that they be paid a zero rate, as that could potentially cost a Bank up to 0.5%.
With negative rates expected to continue for a couple of years yet, and Banks already awash with funging, you'd be asking them to take on a notable cost - I can see why they don't seem to want the UB Deposit customers.
While I understand the point, I think that the discount would be too severe, if they incorporated the deposits into the deal, so the purchasing Bank would never pay it.I take the point that the bank's don't need this additional funding in of itself. But in the context of buying the loan book I think it's slightly different.
Take BOI, rather than buy €9 billion of loans - and pay roughly par value - they've acquired €4 billion of liabilities and are paying out €5 billion. They must see some value in the deposits. If only to reduce the net up front cost of buying the loans.
While we agree on the fact that the Banks won't be able to cope, I think the number will be a lot less than 60,000 - as quite a few people already have more than one bank account, at more than one Bank.For most people, it will be easy enough to open an account in a new bank.
But for maybe 10% of people there will be problems. 10% of 600,000 is 60,000 people. The new banks are just not going to be able to handle that level of problems.
Brendan
Credit unions don't need the deposits either!Small mention of UB closing on a few CU websites, isn't enough, if they are serious about breaking into this space.
While I understand the point, I think that the discount would be too severe, if they incorporated the deposits into the deal, so the purchasing Bank would never pay it.
To try and make it work, in your example, we wouldn't just be talking about €4bn in respect of the deposits, but also adding an additional figures to cover related admin, and say possibly up to three years of additional negative rates impact - so that €4bn deposit book might be seen as having a related cost of closer to €4.4bn. That's not attractive to a Bank, at a time when they are awash with funding, and can't even lend out all that they currently have.
Disagree, all new accounts require new AML validation. To do otherwise opens the door for AML abuse.That is my point. They should be adapted for the very difficult position we find ourselves in.
A letter from Ulster Bank saying that Johnny has a balance of €56,000 in his current account should suffice to meet all the requirements.
Brendan
Let's ride the waves on this and see where it lands
I don't see how the Central Bank could relax or adapt AML requirements - these are legal requirements stemming from EU Directives.The AML rules need to be relaxed or adapted to facilitate such a mass move.
No, but they've said they the want a slice of the current account market.Credit unions don't need the deposits either!
No. It's better to alert the Central Bank to the upcoming chaos and ask them to take steps now to minimise it.
The AML rules need to be relaxed or adapted to facilitate such a mass move.
Brendan
When all is said and done, there's no value in either current accounts or deposit accounts, for Banks, these days (in fact, the large majority of these accounts are operated at a loss) - so neither the outgoing Bank, or the potential new Bank, have any interest in trying to make life easier for the customers who are impacted by both UB and KBC exiting the market.
The wording UB have used suggest that they may be planning on some kind of staggering of notifications, probably to stop themselves being overwhelmed with things too. I doubt it'll go over more than a few months as even 3 months of notifications would push the closure to the end of the year.UB have said that they'll give customers up to 6 months notice, which is better than the CB required minimum (I think it may be 2 months - tbc ? ) - but the CB needs to instruct both KBC and UB to stagger the notifications, so as not to create a bottleneck, with all customers needing to move within the same 6 month period. Roll it out over a staggered 12-18 months, and it's much less of a problem, for example.
That would require a change in legislation, just so people don't have to bring a copy of their passport and a utility bill to a bank?!!!The AML rules need to be relaxed or adapted to facilitate such a mass move.
Brendan
That is primarily to facilitate the operation of FinTech companies in the payment services sector as required by EU Directive.Central Bank of Ireland had a switching code which all the banks were supposed to have signed up for.
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