Belgian-based KBC has become the latest lender to announce its intent to leave the Irish market. The announcement came on the morning of Friday, April 16, and is part of a broader exodus of retail banks from the country. Just weeks prior, NatWest, the UK-based owner of Ulster Bank, stated that it would scale back its operations in Ireland considerably over the course of the next year. KBC is also in talks with Bank of Ireland to sell its existing loans and deposits.
Why have banks been so keen on exiting the Irish loan market? In the case of Ulster Bank, it had been struggling to make returns on investment deemed acceptable by NatWest. KBC’s chief executive, Johan Thijs, stated that talks with Bank of Ireland were being conducted in light of “…the challenging operational context for European banks…” One potential explanation for this trend is the relatively low interest rate environment of Ireland making it difficult for banks to see adequate returns. Further, the market saw a general trend downward from 2015 to 2020, with an average industry …