The announcement that KBC bank is pulling out Ireland follows that of Ulster Bank. It means the loss of thousands of jobs and destroys the myth of Pascal o Donoghue that with ‘more competition’ customers get a better deal.
Trust in the Irish banking system is the second-lowest out of 26 countries. And it is no wonder.
Private banks have engaged in criminal activity to defraud people. At least 40,000 customers have been overcharged, resulting in the loss of homes in a few cases.
Despite their pretence to provide a service, both AIB and Bank of Ireland closed many branch outlets, depriving local communities of financial services. Between 2015 and 2019, 153 branch outlets were closed.
Homeowners are also being fleeced because Irish mortgage rates are double the EU average. The average interest rate charged on a new mortgage is 2.8% but the euro area average is just 1.35%.
This difference might appear small but over the lifetime of a mortgage, they amount to €80,000 on a €300,000 loan.
Irish banks are getting away with paying virtually no tax on their profits because they benefit from a loophole that allows them to write off past losses.
Up to now, the government has claimed that all these problems can be rectified by ‘greater competition in the market’. But with fewer banks, people are forced to rely on a smaller cartel of profiteers.
People Before Profit has long advocated the formation of a state-owned, not-for-profit bank. The existing banks which are closing should be taken into public ownership and the jobs preserved. Mortgage rates should be reduced to the EU average.