My press release on the CCPC Phase 2 Investigation into BoI takeover of KBC

Brendan Burgess

Brendan Burgess

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Consumer advocate calls for Competition Commission to make Bank of Ireland takeover of KBC conditional on operating KBC as a separate entity which does not offer cashback.



Brendan Burgess, the founder of the Consumer Forum, Askaboutmoney.com has made called on the Competition Commission’s to make it a condition of BoI’s takeover of KBC that they run the acquired mortgages in an independent subsidiary with its own lending policies and mortgage rates.

Bank of Ireland has among the highest mortgage rates in Ireland and can only attract new mortgage customers by bribing them with cash back. They also don’t allow existing customers to avail of all the rates on offer to new customers.

KBC competes for new customers on mortgage rates alone and so their rates are much lower both for new and existing customers.

It is essential that the newly acquired unit continues to compete on rates and to offer existing customers the same rates on offer to new customers.

If existing KBC customers end up on Bank of Ireland rates, they will pay dearly for it.

For example, the three year fixed rate for KBC is 2.3% while it is 3% for Bank of Ireland. This would mean that the move to Bank of Ireland would cost a KBC customer with a €300,000 mortgage almost €25,000 in additional interest over 20 years.

Alternatively, if Bank of Ireland does not want to operate a separate subsidiary, then they should pay the legal fees of existing KBC customers who wish to switch to a cheaper mortgage with another bank.

Brendan Burgess



Some examples of the differences in rates between Bank of Ireland and KBC

LTVTermKBCBank of IrelandAdditional annual interest on a €300k mortgageAdditional interest on a €300k mortgage over 20 years
<60%
<90%		Variable
Variable		3%
3.3%		3.9%
4.5%		€2,700
€3,600		€33,211
€45,298
<80%2 year
3year		2.25%
2.3%		2.9%
3%		€1,950
€2,100		€22,894
€24,757
<90%2 year
3 year		2.3%
2.35%		2.9%
3%		€1,800
€1,950		€21,162
€23,020


Ends

Additional note

The Competition and Consumer Protection Commission is conducting a Phase 2 Investigation into the acquisition by Bank of Ireland of certain KBC assets – but mainly mortgages.

They have asked interested parties to make submissions on the acquisition. My submission is attached.

The options open to the Commission are

  • To approve the acquisition unconditionally
  • To approve the acquisition but subject to conditions
  • To reject the acquisition
 

Attachments

  • BoI takeover of KBC submission on Phase 2 by Brendan Burgess to CCPC.docx
    33.5 KB · Views: 138
I got a letter from a KBC borrower in response to the Indo's report on my submission.

He came up with the brilliant suggestion of switching to BoI before the takeover and so get the 3% cash back or the lower rates of new customers.

Brendan
 
I made a submission earlier this month and when i spotted the headline in the Irish Indo yesterday i sat down and wrote the attached second submission to the CCPC. I had not yet read Brendan's submission above or even the full piece in the paper.

Attached is my submission to the CCPC yesterday afternoon.

I urge all KBC customers to make a submission to the CCPC on this and now you have the model for it.

On another Post Brendan says he got a letter from a KBC customer with a suggestion they should switch to BofI before takeover to get the 3k and be treated as a new customer.

I do not know if this would make financial or economic sense as that is dependent on each person's individual circumstances. Strength in numbers. All submit per my submission we all get the 3k switch plus the .2% discount honoured plus fee free banking. If we break apart now we weaken.
 

Attachments

  • Redacted KBC Submission.pdf
    1.3 MB · Views: 318
Last edited:
Guru

That is a brilliant letter. It gives real weight to my somewhat theoretical letter.

And it's so well written that it will make the CCPC think.

Brendan
 
Brendan Burgess said:
Guru

That is a brilliant letter. It gives real weight to my somewhat theoretical letter.

And it's so well written that it will make the CCPC think.

Brendan
Click to expand...
I did not suggest in my letter that customers should switch to Bank of Ireland for the 3% now or to be classified as new customers of BofI now when they won't be after the switch. If as a customer body we act and stick together we stand a greater chance of succeeding in what I outline in my submission. We should never fall for divide and conquer approaches.
 
Hi Guru

Maybe suggestion is too strong a word, but I really love the imagination of idea.

But I think people should wait until they see what conditions the CCPC put on the acquisition. And they might even bar it.

Brendan
 
Consumer advocate calls for Competition Commission to make Bank of Ireland takeover of KBC conditional on operating KBC as a separate entity which does not offer cashback.
Click to expand...
Two banks are leaving the market because they have found it to be unprofitable and you think at third should be forced to take over and operate a one of them as an independent operation.....

What is your objective, force a third one out of the market? The entire European banking sector is contacting at steady rate due to profitability issues, in 20 years time we'll be luck if there is a single Irish bank that is not just a name plate.
 
Jim2007 said:
should be forced to take over and operate a one of them as an independent operation.....
Click to expand...

Hi Jim
They operated ICS independently.
AIB operates Haven and EBS indepenently.

But they should not be forced to take it over. But if they do, they should operate it independently.

Brendan
 
Jim2007 said:
Two banks are leaving the market because they have found it to be unprofitable and you think at third should be forced to take over and operate a one of them as an independent operation.....

What is your objective, force a third one out of the market? The entire European banking sector is contacting at steady rate due to profitability issues, in 20 years time we'll be luck if there is a single Irish bank that is not just a name plate.
Click to expand...
Show me the accounts of KBC which show a loss before you claim they were loss making.
 
Does anyone have an idea how long phase 2 of the CCPC investigation will last? Up to four months was mentioned in a media article around the end of October... Up to four months from the end of October? Would that be reliable as a timeframe?
 
Hi Gráinne

This is my understanding of the timescale:

The deadline from the receipt by CCPC of the last piece of information is 4 months.

So if they are not ready at the end of February, they can ask BoI for some more information which would reset the clock.

Brendan
 
Brendan Burgess said:
Hi Jim
They operated ICS independently.
AIB operates Haven and EBS indepenently.

But they should not be forced to take it over. But if they do, they should operate it independently.

Brendan
Click to expand...
hi Brendan,
reading through your posts regarding KBC exit from the Irish market, I'd like to share my recent experience with KBC.
I have a performing mortgage with KBC which was fixed for 5 years at 3%, currently has €182K remaining on it, this is due to expire on Feb 2023 and I recently requested that they allow me to end the fixed mortgage, move me to variable and waive the break fee due so I can go find an alternative bank of my choice (& at my legal expense) before their proposed sale of their loan book to BOI.

they have written to me stating 'they are not in a position to waive the BFF' and are quoting me €2381 for same!
my rationale for this request was for the exact same reasons you have so clearly laid out, BOI provide more expensive mortgage products than KBC.

I know that I would have agreed to their fixed mortgage T's&C's at the time so I probably have no recourse here, but it is quite shocking that they take this view when it is KBC leaving the market not me.
I do plan on opening an official complaint with the financial ombudsman in order to least highlight the issue
 
Hi buddit

Well done.

Make sure to make a submission to the the CCPC as well as complaining to the Ombudsman.

But don't worry too much about it. The break fee should fall as you get nearer to Feb 2023.

And, you don't need to switch until the fixed rate is up - even if it has been sold to BoI.

Brendan
 
Brendan Burgess said:
Hi Gráinne

This is my understanding of the timescale:

The deadline from the receipt by CCPC of the last piece of information is 4 months.

So if they are not ready at the end of February, they can ask BoI for some more information which would reset the clock.

Brendan
Click to expand...
Thanks Brendan. So can KBC begin to transfer accounts to BoI or must they wait for the all clear from the CCPC first?
 
They must get approval from the CCPC.

1) They must get approval - that probably won't come until February at the earliest, and there will probably be conditions attached.
2) They must give notice to their customers - but I am not sure how long.

Brendan
 
Brendan Burgess said:
They must get approval from the CCPC.

1) They must get approval - that probably won't come until February at the earliest, and there will probably be conditions attached.
2) They must give notice to their customers - but I am not sure how long.

Brendan
Click to expand...
Thanks Brendan. On the notice, I've seen sixty days mentioned in a newspaper article.
 
Looks like end 2022 date planned for KBC->BOI from their committee comments. UB won't be any time soon I'd guess if no progress so far on their purchaser/transfer so far.

www.independent.ie

KBC accounts to move to Bank of Ireland by end-2022

KBC Bank customers’ are likely to see their mortgage shift to Bank of Ireland in late 2022 with the process to be completed by December next year.
www.independent.ie www.independent.ie
 
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