Ulster Bank announced yesterday it will offer free banking to all existing personal customers from February 17th and will advertise from next month to attract new customers.
Rival bank Permanent TSB criticised the move, accusing Ulster Bank of "shutting the bank doors after the customers have bolted".
Permanent TSB, which launched its free current account last year, claimed 4,300 Ulster Bank customers had deserted the bank in 2005 to join Permanent TSB and that the bank was now "playing catch-up".
Permanent TSB also lambasted Ulster Bank, which is owned by the Royal Bank of Scotland group, and Bank of Scotland Ireland, which is owned by Halifax Bank of Scotland (HBOS), of having "delusions of heroism when it comes to Ireland".
Ulster Bank is the first bank to automatically apply free banking to existing customers. Both Permanent TSB and Bank of Ireland, which offers free banking in limited circumstances, require existing customers to opt into the new arrangements.
With National Irish Bank (NIB) offering free banking to people whose accounts are in credit, AIB, the Republic's largest bank, is the only bank at which free banking is not available.
A spokesman for AIB confirmed yesterday that the bank had no plans to abolish its transaction and service charges. Brendan O'Hora, head of retail marketing at Ulster Bank, said its approach demonstrated how it valued existing customer relationships. Ulster Bank also said it was the first bank to abolish the set-up and renewal fees on overdraft facilities.
But this was contested by Permanent TSB head of marketing Niall O'Grady, who said it had not charged those fees to any of the 67,000 customers who opened its free Switch account last year.
Permanent TSB has permission from the Irish Financial Services Regulatory Authority to charge such fees, but decided to waive them for the first year following the launch of the account.
The bank said yesterday it would be waiving the charges indefinitely.
Permanent TSB also reacted to yesterday's announcement by Bank of Scotland Ireland that it planned to "shake up Irish banking" with the launch of a competitive savings account and the opening of its branch network in former ESB shops.
"Maybe it's something in the water but all these Scottish-owned banks think they're solely responsible for competition in Irish banking," said Mr O'Grady.
"But where were they last year while we were fighting a lone battle in this market: clearing out their old ESB shops and scratching their heads about the strange phenomenon of their vanishing customers?"
