IFA President Tim Cullinan has called on the Government to address competition in the banking sector following KBC Group’s announcement to exit the Irish market.
“KBC’s departure is further evidence that the banking sector is dysfunctional and not fit for purpose,” he said.
“This news further erodes the diminished level of competition in the banking sector, given the recent decision by NatWest to wind down its Ulster Bank operations,” he said.
“Effectively, we’re left with three fully-serviced lenders and a duopoly with regard to agri-lending, which only serves to further increase the cost of credit for farmers.”
IFA Farm Business Chairperson Rose Mary McDonagh said that the Government, Central Bank and the Competition and Consumer Protection Commission can no longer stand idly by without taking tangible actions to reintroduce competition to the sector.
“The Government and other stakeholders must look at the issues in the sector from the perspective of borrowers. This ground-up view will enable decision-makers to clearly identify the needs of borrowers and reform the sector accordingly.”
“In the short-term, it must be an immediate priority for the Government to allocate the necessary resources and support to develop full-service community lenders such as Post Offices and Credit Unions as an alternative to our uncompetitive banking sector.”
“Moreover, efforts must be made to attract foreign lenders into the Irish market by reforming the financial crisis-era capital requirements which are driving up the cost of capital for lenders and deterring new entrants,” concluded McDonagh.