Financial Services

Spain’s Bankinter to enter Irish banking market

Move makes it the first traditional overseas bank to enter here since 2005, and follows a slew of exits since the crash

Spanish bank Bankinter is looking to enter the Irish banking market, following the success of its Avant Money mortgages and consumer credit business

Joe Brennan
Fri Apr 26 2024 - 08:39

Spanish banking group Bankinter is planning to enter the Irish banking market on the back of the success in its fledgling Avant Money mortgage and consumer finance offering.

The lender will passport banking services, including a deposit offering, into the Republic under its Spanish licence, it said in a statement on Friday morning, which confirmed an earlier report by The Irish Times online. The bank will work on an online banking model rather than using the traditional branches model. The business will operate under the Avant Money brand.

Passporting through the EU’s Single Market allows a group with a licence in one EU member to operate throughout the bloc.

“Today’s decision paves the way for the strategic expansion of our business,” said Niall Corbett, chief executive of Avant Money, which has about 300 employees between its Carrick-on-Shannon and Dublin offices. “This is a clear commitment to Ireland from Bankinter and we look forward to bringing even more choice, value and competition to the market.

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“It will allow us to better meet the needs of customers by further leveraging Bankinter’s innovative products and customer experience. We see potential for future job creation through the expansion of our operations and offerings, contributing to economic development and employment opportunities here in Ireland.”

The development is seen as a significant boost for competition here following a slew of exits by overseas banks since the financial crash. Retail banking here is currently dominated by AIB, Bank of Ireland and Permanent TSB.

The Spanish banking giant is the first traditional lender from overseas to move to enter the Irish retail banking market since March 2005, when Bank of Scotland moved to buy 52 former ESB shops to set up a boots-on-the-ground banking operation and Copenhagen-based Danske Bank took over National Irish Bank.

Bank of Scotland (Ireland) would hand back its licence in 2010, as a result of the financial crash, while Danske Ireland, which had operated as a branch of its Danish parent group, exited the retail market here in 2013. The final two overseas banks in the market, Ulster Bank and KBC Bank Ireland, decided three years ago to wind down gradually.

Still, the market has seen the entrance in recent years of overseas-regulated online banks Revolut and N26, which offer various loan and savings products in the State.

“Today’s announcement is significant for the Irish banking market, and is very welcome news for households, businesses and consumers, who are the real winners from increased competition,” said Minister for Finance Michael McGrath. He added that the decision “is also a vote of confidence in the strength of the Irish economy”.

Avant Money also said on Friday that it is reducing its fixed-rate mortgages by up to 0.45 of a percentage point from next Friday

Bankinter, the fifth-largest Spanish bank with a €113 billion balance sheet, entered the Republic in 2019 through the acquisition of AvantCard, a credit card and consumer finance business, from US investment group Apollo. AvantCard was subsequently renamed Avant Money, which moved into Irish mortgages in late 2020 with rates starting at 1.95 per cent for fixed-term products, undercutting the cheapest home loans available at the time in the market.

Bankinter recently reported that its Irish loans amounted to €3.3 billion at the end of march, up 43 per cent on the year. Some €2.4 billion of this is mortgages, marking a 53 per cent year-on-year increase. The unit’s pretax profit rose 5 per cent on the year to €9 million.

Avant Money also said on Friday that it is reducing its fixed-rate mortgages by up to 0.45 of a percentage point from next Friday. Its cheapest new offer will be a 3.6 per cent four-year rate on properties with a loan-to-value ratio of less than 80 per cent. It also unveiled a new mortgage switching incentive offering 1 per cent of the mortgage amount to borrowers by way of a cash payment.

To turn the Irish business into an overseas bank branch of Bankinter, the Spanish group is taking over the shares of Avant Money, which were previously held by its Bankinter Consumer Finance subsidiary. All Avant Money’s assets and liabilities will be transferred to the branch, the statement said.

It will continue the activities currently carried out by Avant Money in Ireland, with plans to expand, initially, into the deposit market, following the necessary legal steps and regulatory approval.

Joe Brennan

Joe Brennan

Joe Brennan is Markets Correspondent of The Irish Times

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