Bank of Ireland allows KBC to promote its products to 350,000 customers

Bank of Ireland has allowed rival KBC to promote its current account products to 350,000 personal customers under the terms of a restructuring plan agreed with the European Commission last year.

KBC is the first bank here to avail of the so-called "customer mobility" measure, which allows competitors of a certain scale to promote their products to Bank of Ireland customers.

Bank of Ireland has agreed to do this twice a year out to the end of December 2016.

Switch accounts
The advertising material from KBC urges Bank of Ireland customers to switch their current accounts to the Belgian group to save money.

“As a Bank of Ireland customer, by changing your current account to KBC and using your KBC debit card for cashback to avoid any ATM charges you could save up to €70.40 per year,” KBC’s covering letter states. “Gives us a try. We’re sure you’ll like us.”

KBC invites Bank of Ireland customers to visit its branches in Dublin, Cork, Limerick or Galway and offers a freetext number to contact the bank.

A spokeswoman for Bank of Ireland confirmed that it had facilitated KBC to target its customers. She said the marketing material was sent to a random selection of customers and no personal data was shared with KBC.

The names and addresses of those selected for the KBC material was provided to an independent mailing company and the process is being overseen by accounting firm Grant Thornton, which is acting as a monitoring trustee.

It is understood that the 350,000 customers represents about one-third of Bank of Ireland’s personal accounts.

The material sent to the Bank of Ireland customers also includes a form that allows them to opt-out from receiving any future EU customer mobility mailings.

A spokesman for KBC said: "Under EU state aid rules, Bank of Ireland committed to offer a customer mobility package to relevant competitors in Ireland (as part of the Bank's approved EU Restructuring Plan). KBC Bank Ireland has availed of the measure and information on the KBC current account was recently distributed to Bank of Ireland customers. KBC does not have access to any Bank of Ireland customer information as part of the arrangement."

Market share
Competitors seeking to avail of the customer mobility measure must be licensed as a credit institution in Ireland and have a market share of less than 15 per cent in the product area being targeted.

It remains to be seen how many Bank of Ireland customers are converted by KBC as a result of this mailing. KBC is actively trying to grow its personal banking business in Ireland. It launched current accounts here last year and has opened a handful of new branches.

In November, KBC said its customer numbers had risen to more than 160,000 while its deposit base had grown by about 50 per cent over the previous year to €3 billion.

This is the first time that Bank of Ireland has ever willingly allowed a rival bank here to advertise their products to its customers.

The novel arrangement was a condition of the EU’s approval for its restructuring plan, which was prompted by the receipt of €4.7 billion in state aid from Irish taxpayers from 2009.

Bank of Ireland is thought to be the only bank in the EU subjected to such a condition and it reflects the institution’s substantial share of the retail banking market here.