Help, I’m an Ulster Bank customer. What do I do now?

Message from the bank is changes are still at least a year away but customers may want to prepare to move

Ulster Bank HQ in Dublin. Photograph: Nick Bradshaw/The Irish Times

Ulster Bank HQ in Dublin. Photograph: Nick Bradshaw/The Irish Times

 

First things first. If you’re an Ulster Bank customer, there is nothing you have to do immediately.

The bank has said that it will continue “to offer a full banking service in our branches, online and through normal channels for existing and new customers for the foreseeable future”.

Indeed the bank said this morning that it will most likely until 2022 at the earliest until this changes.

So, if you’re an existing customer of the bank, there is no pressure to do anything at the moment. If you were thinking of switching or becoming a customer of the bank however, this option will now likely be closed to you, as the bank enters a prolonged wind down phase.

I have savings

With more than €20 billion in deposits, Ulster Bank is a major player in the market for savings. While, like most of the banks at present, it offers a poor return, it is nonetheless, better than that offered by other banks.

It paid interest of 0.10 per cent on its instant access account for example, which translates to an annual return of €20 on €20,000 – still better than the zero return you’ll get at either AIB or BOI. It also offered a decent return (in current circumstances) of 0.20 per cent on its 12 month fixed rate account.

If you have savings in an instant access account, you may wish to transfer your savings now; but if you’re locked into a fixed rate there should be no issue simply waiting out your term, and then collecting your savings and bringing them elsewhere.

The problem of course, may not just be the miserable rates of return on offer; it may also be the challenge inf inding a home for these savings.

Banks are moving steadily towards negative rates, with the wealthiest hit first. So, if you have deposits in excess of €1 million, this may be a consideration as you seek out a new home. N26 for example, also charges 1 per cent on new deposits in excess of 50,000. And with a major player like Ulster Bank exiting the market, competition will decline, which means that banks may start to impose those negative rates at lower levels – Ulster Bank may even start applying them itself to “encourage” savers to move their money.

And a credit union may not even accept your savings. Some have imposed deposit limits of as low as €10,000, which means depending on how much you have on deposit with Ulster Bank, they may not accept your savings at all.

If you decide to sit it out, there is a possibility that the bank’s deposit book will be sold, whereby your savings will be transferred to another bank.

If you are concerned by what the future might hold, an option might be to consider the range of State Savings products offered through An Post. It would be very difficult to imagine the state applying negative rates to taxpayers.

While the rates have fallen of late, they are still better than those offered by banks - you can almost earn 1 per cent a year on its 10-year solidarity bond for example.

And remember, you can withdraw your money at any stage, so you don’t have to sit out the 10-year term.

You can check out your options with a comparison site such as that from the Competition and Consumer Protection Commission (CCPC).

Ulster Bank’s current account offering was not the worst, as it allowed you to avoid transaction charges as long as you kept €3,000 in the account at all times.
Ulster Bank’s current account offering was not the worst, as it allowed you to avoid transaction charges as long as you kept €3,000 in the account at all times.

I have a mortgage

With one of the lowest rates on the market, at 2.2 per cent over two years, and an attractive over-pay option for those who can, Ulster Bank has one of the strongest mortgage offerings on the market. And this offering won’t change, at least not for existing customers.

This is because mortgage holders are protected under the Consumer Protection Code, which means that whoever acquires the bank’s mortgages loan book - and Permanent TSB is in the frame - must abide by the terms and conditions of their mortgage as per their loan offer.

So tracker rate customers for example, will continue to benefit from their low lending rates regardless of who acquires the loan book.Similarly, if you’re on a fixed rate for two years, these rates will simply transfer to the new owner.

And, if you have received approval in principle from the bank to buy a new home, the bank has said that you will still be able to go ahead and draw down your loan.

However, it doesn’t mean that everything is completely rosy either. If, for example, a fund was to acquire these mortgages, rather than a lender like PTSB, it would close down any options for remortgaging or extending your borrowings.

Newer borrowers then, may want to ensure better flexibility in the future by switching now.

Should your circumstances change down the line for example - perhaps because one member of a couple is no longer working, or your income has declined - you may find it more difficult to switch at a later date.

As mentioned however, Ulster Bank is one of the most competitive in the market. While Avant has a lower rate – of 1.95 per cent – this is only available to a certain cohort, as your loan to value will have to be 60 per cent or less to qualify. Other options include AIB, which has a low rate of 2.25 per cent on its “green” mortgage.

I have a current account

For current account customers, there will be no changes in the short-term, and no urgency in switching providers.

Yet for certainty, many will now likely go ahead and start the process. Thanks to the switching code in operation across the banking sector, it is a less cumbersome process - but it is time consuming nonentheless.

Ulster Bank customers could begin to start this process by taking note of all the direct debit/standing orders etc that apply to their accounts, to ensure that once you do switch, the arrangements are in place and nothing is forgotten. It may also be an idea to start considering the options.

Ulster Bank’s current account offering was not the worst, as it allowed you to avoid transaction charges as long as you kept €3,000 in the account at all times. This meant that you still had to pay a 2 monthly maintenance fee, but this is competitive when compared with others.

Bonkers.ie has a handy guide which rates the current account offerings by typical monthly cost. KBC for example, costs about €3.50 a month, with BOI €6, AIB €7.25, and An Post the most expensive, at €8 a month. At the other end are the new fintech arrivals, N26 and Revolut, which do have free banking offerings; remember however these are limited, and do your research before committing.

There are nine other current account providers in the Irish market, so there are choices out there; they just may be as competitive as you would have liked.

The bank will have a sizeable cohort of over 66s who will also be looking for alternative providers for free banking. AIB, PTSB and BOI are some ofthe providers offering free banking for this age group.

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