Several banks in Europe have tried to get into the banking industry in Ireland but later discovered that the industry is not as rosy as they thought it would be. Foreign-owned banks see the banking industry in Ireland as unattractive due to the many reasons below.

The banking industry over the last couple of months experienced some glitches due to Covid, but these cannot be compared to the challenges faced by foreign-owned banks and local banks in Ireland. Many foreign-owned banks have a few reasons why they find the banking industry in Ireland to be unattractive.

Central Bank: Lending by banks beginning to recover

The Irish banks now have to hold up more capital when compared to their international counterparts. The core equity tier 1 ratio across the Eurozone countries is 14.4%, whereas it is 19.1% in Ireland, which makes it the fourth highest in Europe. This means Irish banks can’t make more money through lending and this is one of the reasons why the industry is unattractive but a new report from the Central Bank indicates that lending by banks has begun to recover this year, particularly in the mortgage market.

Why is Ireland seen as unattractive by banks?

Ulster Bank, Bank of Scotland Ireland, Rabobank, Danske Bank, and more.

There have been plenty of lenders who have dipped their toes in the Irish banking sector, only to discover in recent years that the temperature of the water is not to their liking, and disappear.

And now it seems one more may be about to join the list, with the shock news that KBC Bank Ireland is in talks with Bank of Ireland about offloading its performing loan portfolio and liabilities.

Banks spend €3bn on delivering digital services – BPFI

According to the Banking & payment Federation of Ireland, the banking industry in five years has invested over €3 billion in offering digital services. These digital services include money management tools and SME lending. During the pandemic, they saw an increase in the demand for fintech services, especially during the pandemic when businesses had to improvise and consider working remotely.

Out of the 100 fintech companies that benefited from these, one-third of these companies were Irish firms; the president of BPFI stated that they teamed up with many Irish fintech because they met the requirements and most of the solutions, they offered were the best.

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