RaboDirect to quit Irish market in May

RaboDirect Ireland, an online savings bank owned by the Dutch lender Rabobank, will quit the Irish market in May. The bank has up to 90,000 Irish customer accounts with a total of €3 billion on deposit.

The bank says it has decided to withdraw from the Irish market after 13 years following “moves by our parent, the Rabobank Group, to simplify its business model across the world and reduce costs”.

It said that the online savings bank was originally launched in Ireland to harvest funding for the parent group’s lending activities.

"[But] as conditions have changed across Europe generally, including Ireland, this source of funding is no longer required by Rabobank," RaboDirect said.

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The move affects about 30 staff. The parent group is separately active in Irish corporate banking, with a focus on the agrifood sector. That operation is unaffected by RaboDirect’s proposed May 16th exit from the savings market.

“[We] will make it as straightforward as possible for our customers to close their accounts and transfer their savings securely to another financial institution. We have begun contacting each customer directly with the actions they need to take before May 16th,” the bank said.

Waive notice period

RaboDirect said it would waive the notice period attached to its notice saver accounts and it will pay the interest due up to the date of closure. With its term deposit accounts, it said it will pay up all of the interest that would have accrued over the full term of the account.

The price comparison website Bonkers.ie described RaboDirect's exit as `another blow to Irish savers'

RaboDirect’s exit from the Irish market comes as little surprise to observers, as it clearly flagged its detachment from the local banking scene over the last 18 months or so.

Previously, the bank had announced its withdrawal from the Irish investment market. RaboDirect customers with active investment accounts were last April transferred by the Dutch bank to stockbroking firm, Cantor Fitzgerald.

It also handed back its local banking licence to the Central Bank of Ireland in 2016.

RaboDirect joins other foreign banks to have left the Irish market in the years since the financial crisis, including the Danish institution, Danske Bank, and Bank of Scotland (Ireland).

The price comparison website Bonkers.ie described RaboDirect’s exit as “another blow to Irish savers”, who already suffer in an environment of negligible interest rates.

"The bank's 90,000 customers will have difficulty finding a traditional savings account that offers good value in this historically-low savings rate environment," said Mark Whelan, head of communications at Bonkers.

“Right now, the reward for putting €10,000 away for a full year with most banks wouldn’t even yield a €20 return after tax.”

Bonkers advised Irish savers to shop around for the best deposit rates, or alternatively to consider other options for their cash, such as putting their money up for peer-to-peer lending.