Varadkar favours a third banking force

I would go one further, and wonder about the need for a retail banking sector at all. Instead, everyone should be allowed borrow direct from ECB at their prevailing rates, same as banks do - which elimates the need for commercial and retail banks.
I don't say that lightly, the careers and livelihoods of thousands of banking workers are under threat as a consequence of emerging technology, 5G, 6G , AI etc and Ulster Banks withdrawal, to me, is just another death knell of the banking sector.
Before this health crisis, I found it rare to go into a bank and when I do it is mostly automated. As an Ulster Bank customer, it is somewhat sad, as I found their customer service over the years to be excellent.

The ECB will definitely not become here a retail and commercial bank - there is no need to nor a will to go that route.
Banking and Banking functions like money lending are around since the Assyrians and will survive all of us.
5G/6G/AI are not a death knell to banks - you make here wild claims. Banking develops obviously with technology and regulations but is not going away.
 
Banking and Banking functions like money lending are around since the Assyrians and will survive all of us.
5G/6G/AI are not a death knell to banks - you make here wild claims. Banking develops obviously with technology and regulations but is not going away.

I appreciate that and accept of course I could be wrong. I'm not suggesting banking is going away, but rather banking the way we know is on its knees. It will still exist, in some form, but my guess is it will be near unrecognisable to what we are used to.
 
I appreciate that and accept of course I could be wrong. I'm not suggesting banking is going away, but rather banking the way we know is on its knees. It will still exist, in some form, but my guess is it will be near unrecognisable to what we are used to.
Technological advancements and changing consumer habits look like they're spelling the end of the traditional branch network.

Almost everyone has pointed out that they use branches a lot less. For those that have been in how many have actually taken out a loan or some other product that made the bank even the smallest sum of money? My guess is very few. I'd say lodging a cheque is about it. Now consider that building has to be heated, insured, rates paid and people in it paid....

Right now banks are swimming in (relatively) expressive deposits. They don't want any more. It's costing them in 2 ways. Deposit interest and regulatory expenses. Negative interest rates might be around the corner. On the regulation side of things taking deposits really hits you if you want to be a lender. It does seem to be a trend that is leading to smaller niche operations at the minute.
 
Talk of a third force in the form of a beefed up PTSB isn't presenting anything new - if anything it is the definition of madness, doing the same thing over again and expecting a different result. Even if you scaled PTSB to to the size of AIB or a BOI they're not exactly best in class internationally. That's in the contexts of a European banking system that is struggling.

Is the future more a collection a specialised financial institutions rather than one universal bank?

For example:
A current account through the like of n26 i.e., a low cost virtual bank built in decent IT - probably with a small fee to make it sustainable.
+
Loans mainly provided by the likes of a non-bank i.e., an Avant. Again mainly online presences (cc card) or broker based (mortgages). Possibly a larger fee based element then what we're use to.
+
Deposit taker like a credit union. Tight limits on deposit balances and low risk lending to fund any interest.
 
Largely due to lobbying by some governments and various vested interests banking and insurance have not been fully subjected single market rules.
Most of what banks have to do is governed by single market rules: from customer due diligence, to early repayment of loans, to deposit guarantee insurance, and so on. What is not governed by EU law is the level of claims (insurance) and the mortgage foreclosure process (lending). You might want to start there and ask why there aren't more foreign players in either market.
This could be mitigated by replacing national central banks with a single EU regulator, akin to what exists in other parts of the economy.
There is a single EU supervisor, the ECB. Standards for banks are set by the European Banking Authority. There is no industry (to my knowledge) with more direct EU-level supervision than banking. An there is regulation for nearly everything a bank does now, a huge amount of its activity is compliance. Nearly all industries face EU regulation of course. But this is generally by way of minimum harmonisation directive. The EU agrees a directive, member states implement it via national law and regulatory bodies (something like product safety for example).
They are subject to divergent national rules and regulatory regimes much more so than most other industries.

This is just not true, see above.
 
The seeds for Ulster leaving were sowed a decade a go when we as a varies agencies (the government, the CBI through its mortgage code and the legal profession) placed the emphasis on keeping people in their homes over having people face to to their contractual committments.

This approach made sense between maybe 2009 and 2014. Some of the distressed mortgages had >200% LTVs and the market was illiquid. Many borrowers were kept where they were, eventually found jobs again and re-engaged. A get-tough policy would have meant tens of thousands of disposessed households which would have had to be housed by the state, which couldn't afford it.

The big policy error was allowing this to go on after about 2015. By that point the market had recovered. Bank losses were limited, and employment was growing by 3% a year. By then it was pretty clear at loan level what was sustainable and what wasn't, but delinquents were allowed to struggle on, and still are.

Part of this seems to be huge latitude given to delinquent borrowers by county registrars and judges too. AFAIK this is very hard to fix by legislation.
 
I wasn't trying to suggest we should have gone full eviction. But we are paying the price for where, as a country, we put the emphasis last time. Part of why we landed where we did was due to the fact our bankruptcy regime was in the dark ages. That's thankfully been updated.

As terrible as the current covid-19 crisis is it could also be an opportunity for Ireland to show how it can deal with arrears and foreclosure in a slightly more balanced way. Again not saying turfing everyone out on the street but at some point a line in the sand will have to be drawn.

The closer aligned we are to the rest of Europe on where that line is the more likely we are to coax a few of those European banks back in.
 
The closer aligned we are to the rest of Europe on where that line is the more likely we are to coax a few of those European banks back in.
The EBA did a long report on the cost of loan enforcement across Europe last November.

On a range of variables: judicial cost, recovery rate, time to recovery; Ireland compares really, really badly.

For example Table 49 shows Ireland sees a recovery of just 30% of the value of re-possessed real estate. For Germany the average is 89%.
 
For example Table 49 shows Ireland sees a recovery of just 30% of the value of re-possessed real estate. For Germany the average is 89%.
A great find. I don't pretend to have read it but skimming through

Table 11 - 11% gross recovery on Irish mortgages, EU average 46%. More or less the same on a net basis.

Table 21 - 3.7 years to recover that value. EU avarage closer to 3 with a lot of other counties significantly shorter.

Also looking at the footnotes it looks like we're overly reliant on personal insolvency arrangements.

Based on those figures we have money pit written all over us
 
I would go one further, and wonder about the need for a retail banking sector at all. Instead, everyone should be allowed borrow direct from ECB at their prevailing rates, same as banks do - which elimates the need for commercial and retail banks.
Most of the borrowing that governments get is from these financial instititions banks, insurance companies and pension providers. Governments need banks aswell. yes the ECB provides the backdrop for negative interest rates but the financial institutions are the means by which they do it. Tying up capital in "secure" assets essentially means banks are now forced to lend more to governments, its called "financial repression" and is the means by which governments are paying for the pandemic.
 
Seems to me we have not learned much from the banking crisis. In that we found ourselves held hostage to failed businesses that we could allow to fail because we ourselves would suffer. What I believe is we need to get as much of our money back from this old carcass and then serve up what's best for our needs. That means means we look to see a possible full integration with financial services in the EU or any other method. The approach should Be, what's best for us.
 
Governments need banks aswell. yes the ECB provides the backdrop for negative interest rates but the financial institutions are the means by which they do it.
Not any more. The ECB just holds the government bonds directly now :)


It's a while since I checked, but Irish banks used to keep an unusually low share of their assets in domestic government bonds.
 
Seems to me we have not learned much from the banking crisis. In that we found ourselves held hostage to failed businesses that we could allow to fail because we ourselves would suffer. What I believe is we need to get as much of our money back from this old carcass and then serve up what's best for our needs. That means means we look to see a possible full integration with financial services in the EU or any other method. The approach should Be, what's best for us.
Ireland is already integrated financially in the EU - we already have a Banking Union - a wider integration (EU wide deposit guarantee) is not in the interest of several other EU countries (Germany, Finland, Netherlands,...) as as they do not want if necessary to bail out savers in countries with subpar governments like Greece or Ireland.

The reasons why foreign banks do not want to operate here was already stated - difficult to repossess homes, high capital requirement with negative interest rates, high costs and low profit.
In Romania 16 foreign retail banks and 6 domestic owned retail banks are operating btw. - you just can't force foreign banks to operate here in Ireland. The conditions are not right and I do not see anything to be changed in the foreseeable future.
 
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I think we definitely need a third big bank for some basic competition. Fees are already on the way up in BOI and UB haven't even left the markey yet.

It's a sign of things to come.
 
I think we definitely need a third big bank for some basic competition. Fees are already on the way up in BOI and UB haven't even left the markey yet.

It's a sign of things to come.

NatWest with assets of £800 billion could be considered a big bank but yet it didn't like the looks of Ireland.

A third Bank like the 2 we have won't solve our problems. It'll just mean a smaller share of the pie for 3 banks with outdated business models.

What we need is something different.

We're unlikely to get much of that while Ireland remains as toxic to lenders as it currently appears to be.
 
Using your German retail analogy I doubt you'd get a Lidl or an Aldi opening in Ireland if 10% of shoppers wheeled their trollies past the til and told them they'd pay later ;) All while the local security guard just shrugged.

Skrooge

That is brilliant.

Expect to see it plagiarised the next time I am talking to a journalist about why we need more possessions.

Brendan
 
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