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Friday 9 June 2023 Dublin: 11°C
Sam Boal
# The Banks
Exiting Ulster Bank gives customers six-month 'deadline' to repay their overdrafts
But bank officials said the lender will remain flexible and urged customers having difficulties to come forward immediately.

ULSTER BANK CUSTOMERS are being warned that customers with unpaid overdrafts will have to repay them in full before the bank exits the market.

Officials from Ulster Bank and KBC Bank Ireland, the two banks that have announced plans to leave the Irish market over the coming year or so, did not rule out the possibility that unpaid overdrafts could eventually be sold on to debt collection agencies.

NatWest-owned Ulster Bank has started writing to current account customers on a rolling basis, giving them six months’ notice to find a new service provider, switch over and close their old accounts.

Belgian-owned KBC Ireland is set to begin the process on 1 June.

But in emails, seen by The Journal, sent to Ulster Bank customers, the lender has warned, “Any overdrawn balance(s) will need to be repaid in full in advance of closing your account(s). If the overdrawn balance is not repaid in full, your credit rating may be affected and you may find it difficult to borrow money in the future.”

One Ulster Bank customer, who wished to remain anonymous told The Journal, “It’s an absolute pain.

“There are big life events which are being saved for and this just heaps a lot of pressure on me at exactly the wrong time. It’s more expensive just to live at the moment, hence why an overdraft might be needed. It could not have come at a worse time really.”

Answering questions from TDs and senators at a meeting of the Oireachtas Committee on Finance, Public Expenditure and Reform, Ulster Bank chief executive Jane Howard urged anyone having difficulty paying their overdraft to contact the bank immediately.

The bank has so far written to 122,000 of its around 330,000 active current account customers, informing them that they will need to close their accounts over the coming months, Ulster Bank officials told the committee.

After the six-month notice period has lapsed, if the customer has not opened a new account with another bank, Ulster Bank will close their old account and give them a cheque for any money left in it.

Howard said the bank had about 70,000 overdraft customers and appealed to them to make contact with the bank to discuss their options.

But in a testy exchange with Sinn Féin finance spokesperson Pearse Doherty — who asked what will happen to those customers who have not been able to pay their overdraft within the six-month window — Howard said the bank will assist customers on a case-by-case basis.

“We’ve already reached out to our customers who’ve got overdrafts,” she said.

Many of them are already starting to arrange a new overdraft into the bank. For those customers that are struggling in some way financially. We’re already putting supports in place for them.

Ulster Bank’s Director of Corporate Affairs Elizabeth Arnett added, “We have customers who may require additional support. That might mean [giving them] extra time or it might not… but it may mean additional support from our support unit. And we will do with that customer on an individual basis.”

Arnett said, “We want to be very clear: the six months is a real deadline. But for customers who require additional support, which may require extra time we will deal with those customers. So if there is anybody who’s listening to this or concerned about that, now’s the time that we will engage with them to get those issues resolved.”

Doherty replied, “Maybe you can inform the committee at a later stage what those supports are because none of your customers seem to know.”

Sinn Féin spokesperson on public expenditure Mairéad Farrell pressed the issue further, asking if the overdraft could eventually be sold to a debt collection agency.

Howard replied, “Ultimately, the time will come when we will have to sell our non-performing loans and that may well include the overdrafts.

But the priority right now is helping customers to get their finances in order and in the right shape. And that’s what we’ll continue to do.

She said a sale of the exiting bank’s non-performing loans is unlikely to happen until next year.

“Again, for now, we’re reaching out to those customers,” Howard added. “We’re actually making quite good contact with them. But if anybody’s out there in financial difficulty, the quicker they talk to us, the quicker we can help.”

She said the bank had started to reach out to customers with a “heavy reliance” on overdraft facilities as early as last October.

In response to questions from Solidarity/People Before Profit TD Mick Barry, Howard said, “We think there’s about 1000 who may have some difficulty in repaying their overdraft balance within six months. So those are the customers that we have been talking to, to understand how can we help.”

In some cases, she said, that will mean “restructuring” the debt on a “reducing loan”. 

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