One to watch
Im surprised they are still here
Probably depends on who gets into power.
What happens to their low-interest mortgages and high-interest savings accounts? You just get a letter saying “Hi, you’re with AIB now. Our rates are X%. Sincerely.”
I’ve been asking around among people who work inside the Irish banks. With 3bn out of 9bn impairment it was described to me as a “suicidal purchase”. However, if vulture funds start bidding on this book, is Paddy Pillar Bank really going to sit back and watch the auction, or will they be itching to get involved…
The book surely has more value to an entity that is (a) not owned/controlled by the Irish government, and (b) not bound by the Code of Conduct on Mortgage Arrears.
In which case the pillock banks could only “win” by overpaying to a lesser or greater degree.
I can’t see it happening under a FG-led government.
The options are limited:
- Closing KBC Ireland down does not seem to be an option.
- Merging KBC Ireland with Ulster Bank has been rejected before on IT cost ground and other reasons.
- KBC Ireland talk about possibly buying a big insurance company in Ireland but there are no known opportunities for this.
- Winding down KBC Ireland over time would be too big a u-turn.
- Keep going with organic growth? Seems unlikely given the big song and dance they have made about a strategic review and then just go back to square one.
- Go digital app-only? Service KBC customer remotely only. Seems unlikely at this stage.
- Sell to another bank? Can’t see any bank being interested.
- Sell to a hedge fund or some other private capital investor? Maybe.
Threaten to sell the mortgage book to a “vulture find” unless the new socialist government buys it.
Didn’t they just recently open a bunch of branches and presumably spend a fair bit on advertising? They’ve been one of the more aggressive cutters of variable rates, too.
KBC to buy another bank to get scale? Permo maybe? Selling off some of the unprofitable tracker mortgage books and keeping profitable books and deposits might make sense to get a large enough footprint. Demographics in Ireland very attractive to new entrants to banking compared to a lot of Europe and growth has to come from somewhere.
The rate cuts have certainly dried up of late, although they were previously aggressive when it came to cutting.
Splitting the book sounds interesting although taking this news combined with the SBP article about it being open season for repos post-election, the landscape in general could look a lot different by the end of the summer.
Anyone know if the election is delaying the “traditional spring selling season”?