Brendan Smith (Cavan-Monaghan, Fianna Fail)
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84. To ask the Minister for Finance if he has had discussions recently with a bank (details supplied) on its decision to withdraw from the market and with another bank in relation to its plan to close 88 branches here given the concern of employees and customers on the resulting loss of banking competition here; and if he will make a statement on the matter. [31696/21]

Mick Barry (Cork North Central, Solidarity)
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129. To ask the Minister for Finance if he will take steps to protect jobs and services in the banking sector; the engagement he has had with bank management and trade unions in this regard; and if he will make a statement on the matter. [31779/21]

Paschal Donohoe (Dublin Central, Fine Gael)
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I propose to take Questions Nos. 84 and 129 together.

The withdrawal of Ulster Bank and the potential withdrawal of KBC Bank Ireland (KBC) from the market as well as the decision by Bank of Ireland to close 88 branches in the Republic of Ireland are regrettable, particularly for their customers and staff and they represent unfavourable developments for the Irish banking market.

However, as the Deputy will be aware, decisions with regard to staffing matters and the provision of services, are the sole responsibility of the board and management of the individual banks, which are run on an independent and commercial basis and as Minister for Finance, I have no role in such decisions.

I note that Bank of Ireland has commented that it will be working closely with all colleagues at these branches and will be setting out a range of options, including relocating to a different branch, moving to a new role in the bank, or voluntary redundancy for those who choose it. I also welcome Bank of Ireland's announcement of a partnership with An Post to ensure that counter services will still be available for its customers locally.

With regards to Ulster Bank and KBC, whilst the management of staff matters is entirely a matter for the Banks and any counterparty who acquires any of their business, I would expect all stakeholders to be very sensitive in relation to the needs and rights of staff. This includes full compliance with any statutory requirements, and honouring all agreements in place between the bank and staff representative bodies. In addition, I would expect these entities to engage with staff representative bodies as appropriate.

By way of update, on Friday 11 June 2021 Ulster Bank announced that a new Colleague Agreement has been reached with the Financial Services Union (FSU) subject to a ballot of its members. The Deputy will be aware that I have met with representatives from both Ulster Bank and its parent company, NatWest in recent months. During these engagements, I have always strongly emphasised the importance of timely communication with staff, customers and other stakeholders in relation to strategic decisions regarding Ulster Bank. I also met with the Financial Services Union shortly after NatWest’s announcement and I have committed to further engagement with them in relation to this issue.

I note separately that PTSB and AIB have both mentioned in their recent Q1 trading statements that negotiations are continuing with NatWest in relation to the potential acquisition of parts of Ulster Bank’s portfolio.

In relation to KBC, officials from my Department met with representatives from KBC last month as part of the normal engagements with the banking sector. In light of its recent announcement, KBC confirmed that work on negotiations are underway, as provided for in the Memorandum of Understanding with Bank of Ireland. KBC emphasised that it is engaging with staff in relation to the announcement.

I welcome the engagements which are taking place both between Nat West and AIB and PTSB and between KBC and Bank of Ireland, as well as the progress last week between Ulster Bank and the FSU. While these are commercial negotiations, the Government is supportive of trying to bring about an outcome that is good for AIB, PTSB, and Bank of Ireland, as well as for the staff and customers of Ulster Bank and KBC and for the Irish economy generally.

Jim O'Callaghan (Dublin Bay South, Fianna Fail)
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86. To ask the Minister for Finance the measures he will be taking to boost banking competition nationwide; and if he will make a statement on the matter. [31706/21]

Neale Richmond (Dublin Rathdown, Fine Gael)
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377. To ask the Minister for Finance the work of his Department to ensure appropriate competition in the financial services market for consumers given the recent decisions of commercial banks regarding their futures in Ireland; and if he will make a statement on the matter. [31693/21]

Paschal Donohoe (Dublin Central, Fine Gael)
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I propose to take Questions Nos. 86 and 377 together.

The retail financial services sector is undergoing a major period of change. This year so far we have seen several major announcements including the withdrawal of Ulster Bank by Nat West and the potential withdrawal of KBC Bank Ireland, the forthcoming closure of a large number of bank branches by Bank of Ireland and a smaller number by AIB. While these decisions are regrettable, I welcome the engagements which are taking place between Nat West and AIB and PTSB and between KBC Bank Ireland and Bank of Ireland with regard to the transfer of business.

I note the news on Friday 11 June 2021 that Ulster Bank has reached a new Colleague Agreement with the Financial Services Union (FSU) and that this agreement is subject to a ballot of FSU members. While these are commercial negotiations, the Government is supportive of trying to bring about an outcome that is good for the banking sector, as well as for the staff and customers of Ulster Bank and KBC and for the Irish economy generally.

The sector is facing a number of long running challenges such as negative interest rates, technological change that is reducing the barriers to entry to a whole range of new entrants, and changing customer preferences as they use more and more digital services, while still wanting the traditional branch network to be available. Competing with online firms while coping with high cost structures is posing a considerable challenge for the traditional full service sector. Overall, this puts pressure on banks' profits, and, in turn, the attractiveness of the market.

The Irish retail banking system is concentrated with retail banks accounting for the majority of new mortgage lending and new lending to SMEs. However, price competition is possible even in a concentrated system. Notwithstanding the recent announcements in the banking sector, Ireland continues to have an extensive network for banking services, including post offices and credit unions. An Post also offers counter services for AIB, allowing customers to lodge and withdraw cash at An Post branches and Bank of Ireland has recently announced that it is following suit. A number of non-banks have also expanded their offerings in the mortgage and SME sectors recently.

The Government wants to ensure that the banking and financial system is one which will effectively contribute and support economic growth and employment. Sustainable and responsible competition in the retail financial sector is vital to ensuring that businesses and consumers have a range of banking options available when using financial services and accessing credit.

As such, my Department is considering a review process that will look at the many issues in depth, provide sensible analysis and implementable recommendations and I hope to be in a position to set out greater details on this soon.

Bríd Smith (Dublin South Central, People Before Profit Alliance)
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87. To ask the Minister for Finance if married couples are facing added difficulties in applying for mortgages from the main pillar banks as a result of the criteria used to calculate couples income; if such criteria are the bank’s own or derives from the Central Bank guidelines; and if he will make a statement on the matter. [31804/21]

Bríd Smith (Dublin South Central, People Before Profit Alliance)
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125. To ask the Minister for Finance his plans to ensure that lending institutions take account of existing tenants' ability to meet current rental costs when assessing their mortgage applications given that couples are being denied mortgage applications for sums whose monthly repayments work out much lower than their current rents; and if he will make a statement on the matter. [31805/21]

Paschal Donohoe (Dublin Central, Fine Gael)
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I propose to take Questions Nos. 87 and 125 together.

The Central Bank of Ireland, as part of its independent mandate to preserve and protect financial stability in Ireland, has statutory responsibility for the regulation of mortgage lending by banks and other regulated entities.

In line with this mandate, the Central Bank introduced macroprudential measures for residential mortgage lending in February 2015. The objective of these mortgage measures is to increase the resilience of the banking sector and households and to reduce the risk of credit driven house price spirals from developing.

The mortgage measures apply certain loan-to-value (LTV) and loan-to-income (LTI) restrictions to residential mortgage lending by financial institutions regulated by the Central Bank. For example, the LTI limit is 3.5 times the borrower’s income. For first-time buyers (FTBs), the LTV limit is 90% of the value of the residential property and for second and subsequent buyers (SSBs) the LTV limit is 80%. However, lenders also have a certain flexibility at their own discretion to provide a certain amount of mortgage lending in excess of these thresholds.

While regulated lenders must comply with the various rules within the macroprudential and consumer protection frameworks, the extension of credit by lenders to potential customers (including a joint mortgage application) is ultimately a commercial decision for the lender themselves and each lender will have its own individual credit lending policies.

Before providing a mortgage, lenders are required to undertake thorough creditworthiness assessments to ensure a borrower will be able to repay the mortgage. This assessment must take into account the individual circumstances of the borrower, including personal circumstances and financial situation. In this context, lenders can and do take into account rental payments when making their affordability assessment as part of regular credit worthiness assessment and underwriting process.

However it is also worth noting that a mortgage is the largest liability that most households will take on in their lifetime and that it comes with less flexibility than a rental contract, leaving borrowers more exposed to shocks to incomes, house prices and interest rates in the future. Therefore, the ability to make regular repayments – evidenced through rental payments – does not substitute for the protection for borrowers in having a down payment for the purchase of a residential property. A mortgage deposit acts as a cushion of housing equity, and can help households to absorb house price falls without the borrower falling into negative equity.

By way of additional information the European Union (Consumer Mortgage Credit Agreements) Regulations 2016 (CMCAR) provide that before concluding a mortgage credit agreement, a lender must make a thorough assessment of the consumer’s creditworthiness. The assessment must take appropriate account of factors relevant to verifying the prospect of the consumer being able to meet his or her obligations under the credit agreement. The CMCAR provide that a lender should only make credit available to a consumer where the result of the creditworthiness assessment indicates that the consumer’s obligations resulting from the credit agreement are likely to be met in the manner required under that agreement. The assessment of creditworthiness must be carried out on the basis of information on the consumer’s income and expenses including rent and other financial and economic circumstances which is necessary, sufficient and proportionate and lenders must be satisfied that mortgages are affordable for borrowers for the duration of the life of a loan.

In addition, the Central Bank’s Consumer Protection Code 2012 imposes ‘Knowing the Consumer and Suitability’ requirements on lenders. Under these requirements, lenders are required to assess affordability of credit and the suitability of a product or service based on the individual circumstances of each borrower. Where a lender refuses a mortgage application, the CMCAR requires that the lender must inform the consumer without delay of the refusal. In addition, the Code requires that the lender must clearly outline to the consumer the reasons why the credit was not approved, and provide these reasons on paper if requested.

If a mortgage applicant is not satisfied with how a regulated entity is dealing with them, or they believe that the regulated entity is not following the requirements of the Central Bank’s codes and regulations or other financial services law, they should make a complaint directly to the regulated entity. If they are still not satisfied with the response from the regulated entity, the response to their complaint from the regulated entity is required to include details for the borrower on how to refer their complaint to the Financial Services and Pensions Ombudsman.