Should I switch bank now with Ulster Bank at risk of closing?

I have all my money in Ulster Bank and I heard last week that there is talk of them closing. I get my salary paid into my Ulster Bank account and I used to work there so don’t pay any fees with them.

I was just wondering should I leave them now and put my money into another bank or different bank accounts, or should I wait?

If I should change, how do I go about that? I don’t earn enough to get free fees in some banks. I have over €90,000 in my bank account so unsure what to do?

Ms C.B., email

Aer Lingus flight changes lead to confusion on refunds

---

Inheritance: can Revenue claim extra tax if thresholds fall?

---

Aer Lingus refund delays leave passengers angry

---

Nursing home charges could leave me homeless

---

There is talk of Ulster Bank's parent, NatWest (known until recently as Royal Bank of Scotland), pulling the plug on the Irish operation. Given the small number of banks in Ireland, it would be an unwelcome move but Ulster has been on the naughty step for a long time.

It required a significant bailout from NatWest/RBS after the financial crisis and has since been found to have serious issues on the technology front. All the time, it has struggled to deliver results that make a strong case for continued support from the UK.

But the latest news has been unsettling for the bank’s hundreds of thousands of customers in the Republic, to say nothing of its 2,500 staff, and you are one of several people who has contacted us over the weekend on this subject.

We are told that we will know the outcome of the deliberations by senior NatWest executives by the end of October so there is no immediate worry.

More importantly, if a decision is made to close the bank, it won’t be something that happens in a hurry. This is not a bank on the precipice of collapse but one that is simply facing some hard commercial choices. As such, if the bank is to close, it will have to have its operations wound down over a numbers of months or, more likely, years.

The bottom line from your perspective is that there is no urgency for you to act and no danger of your salary being paid into a black hole.

We had this situation before, with Danske Bank owned National Irish Bank. If Ulster does decide to close, they will have to notify all customers and make arrangements for them to transfer their accounts to another bank. They will be required by the Central Bank to put in place a structure to do this and to advise customers in a very clear and straightforward manner how it works.

Apart from choosing your new bank and branch, and keeping a weather eye on the process, you as the customer should have nothing to do. Most importantly, the actual process of transferring your account should be done at no cost to you, the customer.

Regular payments

Apart from setting up the new account and organising debit cards etc, the switching process should also ensure the smooth transfer of regular payment instructions like standing orders and direct debits without you having to micromanage the process.

As I am not a trusting person, I would keep a list of such regular payments – mortgage, house and car insurance, utilities, property tax etc – and make sure after the switch that a) they are all in place in the new bank and b) that the payments continue to be made on days in the month that suit you. For some people, this is just after payday, others prefer to spread such payments across the month.

You may need to provide such a list to the bank for the transfer process; we will have to wait and see – presuming that is, that the closure goes ahead.

You will also need to find out whether you need to inform anyone getting money from your bank via such direct debits of the change though again, from memory, this was managed by the banks in the Danske/National Irish Bank case.

Most importantly, there is no mad rush to be hassling your employer’s payments department. Nothing has happened yet: it may not happen at all. If the bank does decide to pull out of Ireland, or just the Republic, any employer will need no more than a month’s notice to divert your wages into a new account.

You have plenty of time for that. Meantime, from your point on view, you are paying no charges on your current banking arrangements. And, as you say, any move to another bank will see you paying fees/charges. They are all pulling back from free banking with the exception of golden years customers - and you are nowhere near that.

So my advice would be to stay put with Ulster until they force you to move. That saves you money – not a lot but some nonetheless.

The one thing I would advise is that you do not let your savings in Ulster Bank, or any other single institution, exceed €100,000. Up to that level they are covered by a State guarantee if anything goes wrong. But if you have more than €100,000 with one bank for any reason, some of that money could be at risk in a collapse.

So, above that guarantee threshold, you will need to split your savings across two banks – not two accounts in the same bank.

Mortgages

A concern for a number of other readers has specifically been in relation to mortgages they have with the bank. What will happen to these and to their monthly payments in the event of a closure?

If Ulster Bank does wind down its Irish business, the likelihood is that the mortgage book – and other loan books – would be sold on to other financial institutions. From your point of view, that should not make any difference. You would still make your monthly payments in the same way you have to date.

The sale of loan books by the lenders who originally agreed the loans has become common in Ireland post-financial crash. It has been a controversial topic as many of those buying the loan books are not traditional banks and are regularly referred to as “vulture funds”.

However, it only becomes an issue where there are problems meeting loan repayment obligations and, even then, the record so far says traditional banks are more likely to pursue borrowers through the courts than these funds.

Of course, Covid and its impact on the economy is making this a nervous time for a great many people but, for those who continue to be in a position to meet their monthly obligations, there should be no noticeable change in relation to their mortgage.

Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2, or email dcoyle@irishtimes.com. This column is a reader service and is not intended to replace professional advice. No personal correspondence will be entered into.