Mr. Ed Sibley:

Deputy Mairéad Farrell may have picked up my opening statement a little wrong in terms of one of the matters to which she referred. If one of the larger banks, or any of the banks, given their number and the amount of competition in the market, was to exit, clearly, there is the potential for that to have significant implications. I completely empathise in terms of the concerns of and uncertainty for those people working for an organisation where there is this type of strategic review ongoing. There was a similar example previously in connection with KBC. A strategic review was undertaken in regard to KBC a couple of years ago and there was similar speculation. At the end of that, KBC decided to stay. I cannot comment or speculate on what will happen with Ulster Bank but it is not a total given that it will leave. I appreciate that there is uncertainty for people who are working for Ulster Bank, and that must be challenging.

In terms of the competition point the Deputy makes, and she referred to my letter, where I would be most concerned is in regard to SMEs. We are seeing a degree more competition in the mortgage market, so the trend is downward and one measure would be interest rates. There has been an increase in competition and we are, as I touched on earlier, seeing signs of potential other competition coming into the market, both from banks and non-banks in mortgages. However, the SME lending is more concentrated again because, of the banks, there are only three banks that are lending to SMEs at any kind of scale. In terms of potential implications were Ulster Bank to decide to leave, that would be the area that is most concerning in terms of the functioning of the market.

There are other options out there for SMEs, and the other two banks and the credit unions are able to lend to smaller SMEs, but none of that is approaching the scale of Ulster Bank’s lending to SMEs. Clearly, that potentially is an area where both the provision of service and lack of price competition might well be a factor. I would agree with the Deputy on her concerns.