FAQ: How does Bankinter’s action affect me?

Bankinter, a leading Spanish banking group, recently disclosed its intention to solidify Avant Money’s status as its Irish banking subsidiary. Bankinter, a prestigious European bank listed in the top 50, operates in multiple countries including Spain, Portugal, Ireland, and Luxembourg.

Avant Money, a constituent of the Bankinter group, caters to the Irish market. Originally known as MBNA credit cards, it has been active in Ireland since 1997, albeit in varied formats. In 2019, Avantcard was acquired by Bankinter and then rebranded as Avant Money, which has seen robust growth in all its business areas, such as credit cards, personal loans, and mortgages.

As at present, Avant Money’s loan portfolio in Ireland stands at €3.3 billion, of which €2.4 billion is in the form of mortgages and the remaining €900 million is in consumer loans. The brand holds an impressively low non-performing loan ratio of 0.34 percent. In the first quarter of the current year, it realised a pretax profit of €9 million and boasts about 200,000 clients in Ireland.

In 2020, Avant Money ventured into the mortgage business and saw notable growth in its mortgage book, which stood at €2.4 billion at the end of March – a 53% increase from the previous year.

This move appears to benefit consumers given the exit of foreign-owned retail banks such as Ulster Bank and KBC Bank Ireland, which had left the Irish banking market under the control of a select few – AIB, Bank of Ireland, and Permanent TSB. These banks have recently faced backlash for their relatively low deposit interest rates, despite the ECB increasing rates to their highest level in years. In contrast, banks in other euro zone countries are offering higher interest rates to draw deposits, and continue to register substantial profits.

The introduction of a new competitor in the marketplace should theoretically result in enhanced deals for consumers across the board. High-ranking officials including Finance Minister Michael McGrath and the Central Bank, who have regularly advocated for increased competition in the industry, see this as a positive development. Avant Money’s CEO, Niall Corbett, declared this as a distinct affirmation of commitment to Ireland, and expressed eagerness in enhancing market choice, value and competition.

However, it remains unclear what the specifics of the offers will be. This news may not be warmly received by existing banks, particularly at a time when AIB, Bank of Ireland, and PTSB are moving back to private ownership. Lack of serious competition had somewhat stabilised their shares; they are now faced with a novel competitor and may need to react depending on Bankinter’s offerings, initially in the deposit sector.

What’s the next step for Bankinter? The bank is adhering to legal and regulatory processes to officially establish itself in Ireland. This will enable the bank to introduce a broader array of financial products and services to the Irish market in the future and provide Avant Money with a full banking license, allowing the company to expand its offerings, starting with deposit products.

Will this result in more bank branches in the Irish countryside? The answer is no, as the bank will operate digitally rather than relying on the traditional branches model.

Existing customers of Avant Money won’t be affected by these changes and can continue using existing channels for cards, loans, and mortgages. Any queries can be answered by contacting the Avant Money line at 0818 409511.

Lastly, Bankinter forecasts potential for future job creation in Ireland by expanding its operations and offerings, anticipated to stimulate the nation’s economic development and job opportunities. The bank currently has around 300 employees stationed in Ireland.

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