The Irish Times view on Irish banking: some welcome new competition

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The announcement by Bankinter that it will increase its presence here and start offering savings products is good news for customers

The financial crash of 2008 has cast a long shadow over the Irish economy and particularly over the banking sector. As big Irish banks were bailed out and foreign players left, competition shrank and customers suffered. In this contextthat it will take a further step into the market here is welcome. It is 19 years since a major lending bank entered the market and so the Spanish bank’s move is clearly positive, even if the likely scale of its operations here remains to be seen.

There is no doubt that the entrance of Avant Money and some other smaller competitors into the mortgage market has increased competition. In turn this has meant that mortgage rates for new borrowers here now compare more favourably with the EU average than had been the case.will also be welcome, as rates for savers here remain relatively low – given that the Irish banks already have big deposit books, they may, however, be slow to respond to a new entrant.

In this context, the move by Bankinter is encouraging, if not a quick solution to the competitiveness issues in the market. The Irish banks have boosted profits significantly in recent years, helped in part by the strong economy but also by widening margins between borrowing and lending costs.

 

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