KBC extends lockdown period after pressure from Central Bank

KBC Bank Ireland has extended the notice period for its customers to close their current accounts due to concerns that the banking system may not be able to process tens of thousands of changes in a short period of time.

BC account holders will now have six months from June to make new banking arrangements, pushing back the earliest deadline to switch to the end of the year.

The Indo Daily: Don’t Count On It: All You Need To Know About Switching From Ulster And KBC Banks

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The closures are a key element of the bank’s plan to exit the Irish market alongside Ulster Bank.

The move comes after the central bank warned both banks that they could not leave if they could not guarantee replacement banking services for their clients.

“We are fully aware of the apprehension around the volume of clients who will seek to open new checking accounts and the challenge presented by the market,” the bank said in a statement on Friday.

“It is our determination to fulfill our responsibilities and minimize, to the greatest extent possible, the inconvenience caused to our customers.”

Under a new protocol, KBC will begin issuing the first closure notification letters in June alerting customers that they will have six months to close their accounts.

The letters will be sent on an ongoing basis through early 2023, including reminders to customers about the impending deadline. The bank also said it would use email and SMS to keep departing customers informed and handle closures in a “careful and efficient manner”.

KBC said it has about 130,000 active checking accounts and estimates that 52,000 customers will need to open a new account elsewhere or switch to a different provider.

KBC has agreed to sell its profitable €9 billion mortgage portfolio to Bank of Ireland. That deal also involves the transfer of 5 billion euros in deposits.

However, the transaction does not include checking account holders, who are forced to seek alternative banking arrangements en masse.

Separately, AIB has confirmed that it is now in exclusive talks with NatWest to buy a €6bn portfolio of tracker mortgages from Ulster Bank as part of the UK bank’s exit plan.

On Thursday, the Competition and Consumer Protection Commission approved AIB’s takeover of €4.2bn of commercial and corporate loans from Ulster Bank despite acknowledging the deal would reduce competition in commercial banking.

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