Spanish banking giant to enter market in huge boost for competition

The move comes as the banking market here has suffered from the loss of Ulster Bank and KBC Bank, leaving AIB, Bank of Ireland and PTSB.

The three domestic banks have reported bumper profits in the last while.

Now Spain’s Bankinter is set enter market here on the back of the success in its Avant Money mortgage and consumer finance offering.

Avant Money has been gaining market share despite AIB, BoI and PTSB writing almost 90pc of new mortgages in this market.

The move by Bankinter is set to send shockwaves through the Irish banking system as it was thought that up to now that full service banks would not enter this market due to its small size and difficulties repossessing homes when mortgage holders default.

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It is understood Bankinter initially plans to passport in banking services, including a deposits offering, under its Spanish licence but using the Avant Money brand.

But it is expected to eventually apply for a full Irish banking permit. Sources said that the bank will be digital-based, rather than using the traditional branches model.

Passporting through the EU’s Single Market allows a firm with a licence in one EU member to operate throughout the bloc.

Niall Corbett, CEO of Avant Money, said: "Today’s decision paves the way for the strategic expansion of our business. This is a clear commitment to Ireland from Bankinter and we look forward to bringing even more choice, value and competition to the market.

"It will allow us to better meet the needs of customers by further leveraging Bankinter's innovative products and customer experience. We see potential for future job creation through the expansion of our operations and offerings, contributing to economic development and employment opportunities here in Ireland."

It will likely be seen as a significant boost for competition here following a slew of overseas banking exits since the financial crash.

In 2018 former ECB president Mario Draghi described Ireland as a “quasi-monopoly”. Since then both Ulster Bank and KBC have left the market.

The lack of banking competition in this market has long been acknowledged by the Central Bank and the Competition and Consumer Protection Commission and by the Government.

The Government’s 2022 Retail Banking Review dedicates a whole chapter to competition.

Bankinter is the fifth-largest Spanish bank with a €113bn on its balance sheet.

It came into this market in 2018 through the acquisition of AvantCard, a credit card and consumer finance business, from US investment group Apollo.

AvantCard was subsequently renamed Avant Money, which moved into Irish mortgages in late 2020 with rates starting at 1.95 per cent for first-term products, undercutting the cheapest home loans in the market at the time.

Bankinter recently reported that its Irish loans amounted to €3.3bn at the end of March, up 43pc on the year.