Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

It is important to acknowledge that there is competition in the Irish market. We have the pillar banks, obviously, but Permanent TSB is playing an increasing role in the SME market. It has significant ambition in that space. On the personal banking side, we have a foreign-owned bank, KBC Bank, in the Irish market. It has restated its commitment to remaining in this market, which is important.

When we emerged from the financial crisis, the Irish market lost many foreign-owned banks. They departed because of the level of losses they incurred. The Deputy made an important point. Ulster Bank left the Irish market for financial reasons. It is a bank that makes commercial decisions and if it does not see a pathway to a sustainable return on equity, it will not remain in the market. Unfortunately, to our cost, that is the decision it made. We have seen some entrants in the mortgage area. We have Avantcard, for example. Although it targets a particular part of the market, it is offering a rate as low as 1.95%. I very much welcome seeing that level of competition in the market. An increasing role is now being played in the provision of financial services by non-bank lenders across a range of platforms. A number of fintech operators have entered the Irish market. They are lean, have a very low cost base and operate within the regulatory environment.

As a former member of this committee, I spent a lot of time engaging with credit unions. In the previous Oireachtas, this committee compiled a very good report on the key challenges that credit unions face. The Government is determined to work with credit unions in developing a strategy that provides a sustainable basis for the expansion of their services in communities. From my engagement with them, it is clear they are expanding their services and investing in technology. While they have issues with certain aspects of regulation, regulation is carried out in an independent manner and must be done.

I touched on the issue of post offices. I am liaising with the Minister for the Environment, Climate and Communications, Deputy Eamon Ryan, and the Minister of State, Deputy Hildegarde Naughton, on the future of the post office network and how we can support An Post. However, we must also acknowledge hard realities. Deputy Tóibín touched on the level of capital provision that is required under the risk-rated assets system for Irish banks. That is determined by regulation and is not determined by the Government in any way. The truth is that the system ascribes an additional premium to lending in Ireland because it is seen as more risky. That reality is related to the requirement to hold additional capital. Those are the issues we need to consider and work our way through to make sure we hold on to the competition we have and try to find new ways of bringing in additional competition.