As Niall Corbett, chief executive of Avant Money, presses ahead with plans to turn the nonbank lender into a full Irish bank branch of its Spanish parent Bankinter, some personal goals have been put on the back burner.
“When I came in to the CEO role in 2022, I was asked to learn Spanish. I haven’t been very successful, but I’m trying,” says Corbett from the mortgage and personal finance provider’s boardroom in Sandyford Business Park, Co Dublin. “I’m a numbers guy. For me, Spanish is the hardest part of the job. But it’s one of my new year’s resolutions to work on it.”
Corbett’s team started this week to send emails to the 200,000-plus customers of Avant Money, confirming the company will merge in April into a new Irish branch that Bankinter has set up in the Republic.
The lender traces its roots to a credit card hub set up by US financial services giant MBNA in Ireland in 1997. It has been owned by Bankinter for almost six years.
Bankinter is the first traditional overseas bank to enter the Irish retail banking market in 20 years, when Bank of Scotland moved to buy scores of former ESB outlets to set up a boots-on-the-ground banking operation and Denmark’s Danske Bank took over National Irish Bank. Both would be among a wave of banks to exit the retail market in the wake of the financial crash.
Corbett, who joined Avant Money in 2019 from Bank of Ireland, said Bankinter’s bank branch plan is part of the careful “step-by-step” approach the Spanish lender has taken to the Republic.
Spain’s fifth-largest bank by assets entered the Irish market in 2019 through the purchase of Avantcard (as MBNA Ireland was renamed after private equity firm Apollo acquired the business in 2012), before entering mortgages in late 2020 with rates starting at 1.95 per cent for fixed-term products, undercutting the cheapest home loans available at the time in the market.
The last of the two boom-era overseas-owned banks, Ulster Bank and KBC Bank Ireland, have since gone into wind-down after requiring large bailouts from their parents during the financial crisis.
“It may be unusual to have a bank coming into the market when others have been leaving,” Corbett says, “but Bankinter has been very smart on this. They looked at the Irish market – the demographics, the economy and the educated workforce – and I think they saw an opportunity, maybe a low-risk opportunity, here. They are experts in consumer finance.”
Bankinter, which has a €118 billion balance sheet, was founded in 1965 as an industrial bank joint venture between Banco Santander – the one-time regional Spanish bank that the powerful Botin banking family turned into Europe’s fourth largest bank over the past 116 years – and Bank of America.
Rebranding
Bankinter’s executive vice-chairman is Alfonso Botin. He is a son of the company’s early driving force, the late billionaire Jaime Botin, who made international headlines five years ago when he was convicted of attempting to smuggle a Picasso out of Spain on his yacht. He was spared jail because of illness, but was fined €91.7 million.
His family continues to own more than 23 per cent of the bank through a holding company.
Ireland is Bankinter’s third foreign market after the group set up a private banking operation in Luxembourg in 2013 and bought UK-based Barclays’ retail banking business in Portugal three years later.
Avant Money will remain the trading name for the Irish bank branch for now. But it is expected to be rebranded under the Bankinter name in time.
The Irish business will work on an online model rather than relying on traditional bricks-and-mortar branches. It has 300 employees, two-thirds of whom are based in Carrick-on-Shannon, Co Leitrim, with the remainder working from Sandyford. The plan is to add about 30 new jobs this year, Corbett says.
What’s really important for us is to be transparent – there are no ‘gotchas’ or hidden fees
Avant Money will start off life as a bank branch by offering deposit accounts – though Corbett declines to be drawn at this stage on a pricing strategy for fear of cropping up on the radar of competition regulators.
“We’ll try to bring to the market products that are innovative and flexible. But what’s really, really important for us is to be transparent – that there are no ‘gotchas’ or hidden fees,” he says.
Irish banks were among the slowest to pass on interest-rate hikes to customers when the European Central Bank (ECB) rapidly increased its official deposit rate from minus 0.5 per cent to 4 per cent in the 15 months to September 2023 amid a fight against inflation.
Inertia among customers, too, has left about 87 per cent of household deposits languishing in current or on-demand accounts, earning little or nothing.
[ Irish savers placing less cash in high-rate deposit accounts ]
Irish savers in effect subsidised borrowers during those ECB rate rises as domestic banks were also slower to pass on rate increases to mortgage holders – other than ECB rate-linked trackers – than the average European lender. Irish banks, therefore, have less scope now to reduce deposit rates than European peers to cope with the impact of the current point in the cycle where the ECB is cutting rates again.
Bankinter’s chief executive, Gloria Ortiz, said on a call with analysts last year that the move to operate as a bank branch in Ireland was “not just about gathering deposits”, but an opportunity to get into, and “cross sell”, other products.
Bank of Ireland alumni
Before joining Avant Money six years ago this month, Corbett had worked at Bank of Ireland for a dozen years, most recently as head of finance for the bank’s Irish consumer banking business, which spans everything from current accounts to personal loans and mortgages.
Bank of Ireland has, in the past, been the employer of Corbett’s mother, father, two sisters, brother, a brother-in-law and sister-in-law. He was the last family member still with the largest Irish retail bank by assets when he handed in his notice.
Corbett had initially joined the bank in January 2007 – a month before the group’s market value peaked at more than €18 billion at the height of the property bubble – having previously worked at accountancy firm Mazars Ireland, where he trained as a chartered accountant after studying commerce at University College Dublin (UCD).
I may not have gotten any bonuses, but I got a brilliant education at Bank of Ireland
The Dubliner arrived just as the first rumblings were being felt in the US mortgage market as default rates began to spike on loans to borrowers with weak credit ratings – something known as sub-prime mortgages, which would soon become part of the common lexicon.
“People were saying at the time that we weren’t going to be impacted [in Ireland],” he recalls. “But by September 2007, I was certainly starting to think something could be happening here, too.”
Bank of Ireland would require a €4.8 billion bailout between 2009 and 2011, though it was alone among domestic banks and building societies in avoiding falling under state control during the crisis.
“I may not have gotten any bonuses, but I got a brilliant education at Bank of Ireland,” he said. The experience was formative for a generation of bankers, including Corbett.
“Bad lending is good for no one. It’s not good for the person or company you’re lending to, it is not good for the economy – and its certainly not good for shareholders [of lenders],” he says. “But I’m also very commercial. We have to lend money to make money. It’s about getting the balance right.”
[ Savings and investments back to pre-Covid levels, Bank of Ireland says ]
Corbett became head of business banking at Bank of Ireland for Dublin in 2013. “My remit was always to lend. During the difficult period, it was like shooting fish in a barrel because not everybody was lending at the time and there was a really great opportunity. There were still really good businesses that needed to borrow. And that gave me a lot of confidence at the time.”
In mid-2016, Corbett became head of the finance function for the group’s consumer banking business in Ireland.
“At the time, I’d been in the regional manager role for about three-and-a-half years, but I need to keep myself motivated. It was a great opportunity to learn about how the bank worked on the financial side.”
His move came just as the Central Bank’s tracker mortgage examination was kicking off. The industry-wide scandal would end up costing Bank of Ireland €340 million, including refunds and compensation, the cost of a fine, legal fees and administrative expenses.
Corbett, meanwhile, was approached in 2018 about the chief financial officer position at Avantcard.
“I was 40 years old at the time and I was ready for a new challenge,” he says. “I have nothing bad to say about Bank of Ireland, but there was an opportunity to go into something that was small at the time and see if we could make something of it.”
Bankinter had already agreed by then to buy the lender as part of a wider deal with Apollo that also covered banking assets in Spain.
Avantcard had just taken over Tesco’s Irish credit card portfolio and had entered into a deal to provide credit card and personal loans to An Post customers. Its total loan book stood at about €375 million by the time Corbett joined, according to Companies Registration Office filings.
“This acquisition has worked,” he says. “From the get-go, they’ve been very clear with us about the importance of discipline in achieving objectives and becoming more efficient. But they’ve given us all the autonomy that we’ve wanted to drive the business.”
The local Irish management team – then led by chief executive Chris Paul – secured approval from Bankinter in December 2019 for a proposal to enter the mortgage market.
“In January, we set up our war room down in the IFSC,” he says, referring to the International Financial Services Centre, Dublin. “Eight months later we had our first application.”
The team had a wobbly moment that March as Ireland and the rest of the world went into lockdown amid the first wave of Covid-19, but they decided to crack on.
As it happened, the global workplace shift to Zoom and Microsoft Teams proved a blessing, according to Corbett, as it did away with unnecessary travel by people back and forth to Spain to progress the plan.
While Finance Ireland and ICS Mortgages became the first lenders to enter the Irish home loans market since the property bubble in 2018 and 2019 respectively, they were forced to retrench in 2022 as the cost of their own funding in wholesale and bond markets soared.
Avant Money, like the mortgage operations of the domestic banks, continued to benefit from relatively cheap funding from its deposits-rich banking parent.
Its current cheapest mortgage rate is 3.4 per cent for a four-year fixed term on a loan worth up to 80 per cent of a property’s value. Many of its rates are at the cheaper end of the market range, according to Competition and Consumer Protection Commission data. It is also alone in the market in offering longer fixed rates products for between 11 and 30 years.
Avant Money’s mortgage book grew 41 per cent to €2.7 billion in the 12 months to last September, according to its most recently published figures, with new lending for the first nine months of the year rising by 37 per cent to €900 million. It reported a 12-month share of new Irish home loans of 8 per cent.
The lender’s consumer credit book rose by 18 per cent on the year to €900 million. Net interest income for the first nine months of the year increased by 7 per cent to €73 million, while its pretax profit advanced 12 per cent to €29 million.
Look, in time, would I love to have a full-service bank here? But that’s my own personal view
The past year has seen a few more non-bank start-ups creep into the market in the form of MoCo Mortgages, owned by Austrian bank Bawag, and Nua Mortgages, backed by the Allen beef barons of Wexford.
ICS has also become more active, again amid easing market funding conditions, even if Finance Ireland remains at the sidelines. Neo-bank Revolut, meanwhile, is promising to shake up the Irish home loans market this year.
Corbett reckons Avant Money captured about 7 per cent of new mortgage lending for 2024 as a whole, behind Bank of Ireland, AIB and PTSB.
He is coy when asked about the next product line Avant Money is planning after deposits.
Current accounts, surely? “Absolutely, you could naturally think about current accounts, but right now we’re focusing on deposits,” he says.
How about business banking or investment products? “My passion is business and corporate, that’s my background,” he says, glancing nervously at an adviser in the room to gauge whether he’s gone too far. If only.
“Look, in time, would I love to have a full-service bank here? But that’s my own personal view.”
Back to the more immediate future, Corbett says he aims to “surprise people” with his Spanish language progress this year. He managed to string four or five sentences of Spanish together at the start of a speech at an annual Bankinter gathering in Madrid in November, before he drifted back to English in front of an audience of hundreds.
“I joke that as long as the numbers keep going up, I’m okay,” he says, “but I know I need to put more time into learning Spanish. And I will.”
CV
Name: Niall Corbett
Age: 46
Position: Chief executive of Avant Money
Lives: Mount Merrion, Co Dublin
Family: Married to Katya, who is originally from Russia, they have three children – Anna, Sofya and Nikolai
Hobbies: Football and keeping fit
Something about Corbett that readers might expect: He’s learning Spanish, very slowly
Something that might surprise: Bank of Ireland has been employer in the past to Corbett, his mother, father, two sisters, brother, a brother-in-law and sister-in-law.
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