Syndicated Archives - Page 5 of 252 - Devine Accountants

Former Anglo Irish Bank shareholders invited to make submissions on pre-bailout shares

Former Anglo Irish Bank shareholders are being invited to contact a Government-appointed official who must determine whether their investment had any value when the bank was nationalised in January 2009.

Given the scale of losses borne by taxpayers who carried the €30bn costs of bailing out Anglo Irish Bank there is no prospect of a pay out for its former shareholders.

Following its nationalisation the bust bank was put into a special liquidation in 2013 under the control of Kieran Wallace and Eamonn Richardson of KPMG. They are still worked through the liquidation, with billions of euro of assets sold off and claims being settled with creditors including taxpayers who bailed out the stricken lender and controversially with some bondholders.

Separately, on November 16 last year, another official, David Tynan who is a partner at PwC, was appointed as Assessor to determine the fair and reasonable value of shares transferred and rights extinguished as a result of the State takeover of Anglo, under the terms of the 2009 nationalisation.

From Thursday, David Tynan will begin writing to former shareholders and advertising to alert anyone else with a possible claim, that he has begun that work. A website has been set up with details of the process.

Former investors are invited to make submissions in respect of the value of their former shares or other rights in Anglo Irish Bank as at 15 January 2009.

Submissions must be made in writing by email or by post by March 29 this year.

Following an initial assessment, a copy of a draft report will be sent to anyone who has made a valid submission, or who has been nominated by the Minister for Finance to receive a copy.

Anglo Irish Bank’s shares had collapsed well ahead of its nationalisation. They traded at €0.22 each on January 15, 2009. The same shares had peaked at €17 each in May 2007.

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Interest rates here to rise even though ECB won’t hike until 2022

Bank of Ireland doesn’t expect the ECB to raise interest rates until 2022, but reckons lending rates here are set to increase.

Pricing of longer-term mortgage deals, of five years or more, are tipped to increase most, Bank of Ireland chief financial officer Andrew Keating said yesterday.

The bank – along with its rivals in the Irish market – has cut rates for borrowers in the past year, but is now signalling a reversal. That reflects a higher cost of money on financial markets, where ECB interest rate increases in 2022 are now being priced in to bond deals, and is also based on a higher cost of capital for longer-term lending, Mr Keating said.

“I think they (mortgage interest rates) will increase from here,” he said yesterday.

Bank of Ireland shares fell as much as 8pc yesterday after a badly-received set of full-year results including reduced margins and a smaller than expected pre-tax profit for last year. The bank announced its first increase in total lending in a decade, however – to €77bn – even as CEO Francesca McDonagh warned that small and medium enterprises (SME) were holding off borrowing pending the outcome of Brexit negotiations.

That constrained borrower appetite creates an investment gap with European rivals, she warned. Despite the potential impact of the UK’s plan to leave the European Union, Bank of Ireland is “committed” to the UK business and will not cut lending to Irish SMEs, she said.

The bank reported underlying profits of €935m for last year, down from €1.08bn in 2017. However, it proposed an increased dividend to 16c per share, or €173m, for 2018.

The bank said a fall in its net interest margin (NIM), a standard measure of profitability, reflected competition in the UK where a strategic shift into higher margin business is under way and will include the sale of the bank’s credit card business. NIM fell to 2.20pc at the end of December, below analysts’ forecasts and down from 2.32pc 18 months ago. A further decline to around 2.16pc this year is now expected.

The revised outlook would likely lead Davy to cut its forecast for Bank of Ireland’s underlying profit before tax in 2019 by 5pc, with cuts in 2020 and 2021 also likely, the stock broker said.

In the mortgage market, Bank of Ireland said it had increased lending 17pc last year and taken a 27pc market share. New mortgage lending had also fed into a 21pc rise in business income growth as seven in 10 new borrowers opted to buy Bank of Ireland protection policies along with their mortgage after the bank streamlined the buying process.

In relation to tracker mortgages, Ms McDonagh said there were no new cohorts of borrowers the bank believes should be added to 9,700 previously identified cases. Asked about a group of around 200 bank staff and ex-staff who have formed a group to fight for trackers and to be refunded for claimed overcharging, she said she believed the bank had acted fairly.

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‘Market is nervous over Bank of Ireland Brexit exposure’

Bank of Ireland has a massive question mark hanging over it, and it won’t be answered for investors until we see how Brexit pans out.

A shares plunge yesterday took the shine off some good news for shareholders in the shape of an increased dividend and confirmation that the bank finally managed to grow its loan book for the first time since the crash. Disappointing margins momentum was the immediate trigger for the share fall, but the wider context is a bank almost unique in its exposure to the two markets most vulnerable to Brexit.

That’s a hard narrative to combat. Chief executive Francesca McDonagh was keen to point out at a press conference yesterday that the consensus view among experts is that both the Irish and UK economies will grow this year, despite Brexit.

Bank of Ireland itself is just six months into a 40-month strategic plan, Ms McDonagh pointed out. Management are hitting their targets, but delivery is necessarily in its infancy.

The bank’s own relatively benign outlook is based on the expectation there won’t be a hard Brexit and resulting economic shock.

But for a nervous stock market, the upsides for Bank of Ireland are medium- to long-term and relatively modest. The downsides are close and potentially big.

There probably won’t be a hard Brexit. But there is a material risk that the British economy is about to be plunged into a crisis, beginning as soon as March 29, that will send shock waves through swathes of the Irish economy too.

Those countries make up Bank of Ireland’s only substantial market – split roughly 30pc (UK)/70pc (Ireland).

To date Brexit has had relatively little effect; despite two years of currency volatility and economic and political uncertainty.

Ms McDonagh said yesterday that Bank of Ireland’s Irish small- and medium-sized business customers are deferring investment decisions, and when they do borrow are opting to draw down only a fraction of the funds available. It’s a short-term problem for the bank that could reverse quickly if there is a real resolution to their Brexit uncertainties this year. Bank of Ireland is certainly well-positioned to benefit from a Brexit rebound.

But if a hard Brexit causes a real economic shock the bank faces into a very different prospect. SMEs in Ireland will be hammered if the UK throws up a tariff wall next month, especially those in counties on each side of the Border, and in sectors like agri-foods and traditional manufacturing.

Retailers and the hospitality sector will be equally battered if a sterling crisis means British tourists no longer have the means or inclination to visit and shop here.

In the UK, Bank of Ireland has largely exited business lending, but it has a big exposure to British consumers through its mortgage, car finance and consumer lending. Inflation caused by a decline in the value of the pound is a potential trigger for an interest rate shock. Consumers will be squeezed.

Unlike the last crash, Irish consumers are the best-insulated part of the bank’s business.

If things do come to the worst, Bank of Ireland can point to a track record of resilience and crisis management dating back to 2008.

But in the meantime, uncertainty will weigh regardless of the bank’s own actions.

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Ibec calls for new SSIA-type savings scheme

Employers’ group Ibec has called for a new SSIA-type savings scheme to allow households benefiting from economic growth to save more.

Chief executive Danny McCoy said the greater complexity of the Irish economy, in particular the more pronounced economic cycles, required fresh thinking and new policy responses.

He said a revamped special savings incentive account (SSIA) could encourage savers to set aside money on a regular basis while tempering the current upswing in the economy.

The original SSIA scheme, presided over by former minister for finance Charlie McCreevy some 18 years ago, offered participants a top-up of 25 per cent on their savings over a fixed five-year term. However, it was widely criticised as it matured right in the middle of a boom, flooding an already overheating economy with more money.

Mr McCoy said any new scheme would have to work on a countercyclical basis.

“Further incentives could be built into these schemes to encourage a future staggered withdrawal of these savings or even to provide a bridge to pension provision,” he told Ibec’s annual leaders’ conference in Dublin.

“Without flexibility in monetary policy and the limited impact of fiscal policy measures in this new Irish economic model, we must be much more innovative in our policy solutions,” he said.

Central Bank governor Philip Lane is also in favour of having another SSIA scheme so the public could get in on the act of saving when times are good.

Investment problems
In his speech, Mr McCoy also called for a proportion of the State’s bumper corporate tax revenue to be set aside to address investment problems in housing, transport and higher education.

“We must be much more strategic and ambitious on how we manage these unexpected corporate tax revenues,” he said.

“These proceeds need to be ring-fenced to provide funds for long-term capital needs. Not ring-fenced for future current spending, but dedicated for long-term capital needs already apparent,” he said.

“This would ensure that if, and when, Ireland arrives at the next downturn, we have the resources already invested in critical infrastructure and productive investment even when budgetary arithmetic is difficult,” Mr McCoy said.

Ireland’s business model was undergoing profound change and it was imperative that we fully understand these changing dynamics, he said.

“If you do not understand the patient, you cannot prescribe the most effective medicine. Ireland’s business model is different and because it’s different we need new thinking in public policy to adapt to changing circumstances,” he said.

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Bank of Ireland shares fall as its pre-tax profits for 2018 drop

The chief executive of Bank of Ireland has said the bank is keeping all options on the table when it comes to reducing its non-performing loans level further.

Francesca McDonagh said the bank is committed to lowering its non-performing loans and has improved its position over the past year by almost a quarter.

She said the lender is making good progress, but it has been very explicit that is open to putting all options on the table and is working hard to look at ways to potentially get to the target of 5% or lower quicker.

She added that the company is focusing on buy-to-let mortgages in particular in this regard.

Bank of Ireland said its Non-Performing Exposures (loans) reduced by 24% to €5 billion last year and its NPE ratio now stands at 6.3% – the lowest among Irish bailed-out banks.

Ms McDonagh said that keeping capital land-locked in a non-performing portfolio is not necessarily the best way to grow the business, serve customers and provide a return to shareholders.

In relation to a Sinn Fein private members bill that seeks to require the consent of borrowers before their loan could be sold to a so-called “vulture fund”, she said the bank thinks the proposed law would ultimately be bad for the Irish consumer and Irish economy.

The CEO said the draft law would conflict with ECB policy, result in capital being trapped and disincentivise the very competition many politicians would want to encourage.

In relation to the tracker mortgage controversy, Ms McDonagh said of the 9,700 customers who were identified as being impacted, 98% have received offers from the bank.

She said 333 people have not yet been found by the bank as they have moved away.

A huge amount of resources had been put in place to deal with the matter, the CEO said, adding that it should never have happened.

She said the bank has been working very hard to remedy the situation for its customers and a lot of lessons have been learned.

The issue had opened up a much wider conversation around culture, she stated, and the bank has now established values it wants to be judged by.

Regarding the ongoing cap on banking executive’s pay, Ms McDonagh said the bank has been consistent in its view that there needs to be normalisation of pay in the context of normalisation of the sector.

She said the issue is less about the €500,000 cap, and more about the ability to vary pay.

She added that banks are not looking for special treatment, but just want to be competitive.

Ms McDonagh said banks are not only competing with each other for talent but also with Silicon Docks style firms.

She said the bank is not losing large numbers of staff over the issue, but retaining and attracting talent in the sector is becoming more difficult.

Asked about Fianna Fáil’s desire to see limits placed on variable mortgage rate increases, Ms McDonagh told RTE News that in general the bank would want any regulation to protect customers but also enable greater competition between banks.

She said Bank of Ireland feels that restrictions in terms of how it prices and differentiates itself are ultimately in the best interest of the economy or for customers in the long-term.

In relation to Brexit, the bank boss said there is a huge amount of uncertainty around it and therefore she can not be definitive about it.

But she added that she could be certain that the bank is ready for whatever type of Brexit unfolds.

“We feel we have an all-weather strategy to deal with whatever Brexit might present for us as an institution”, she said.

She also added that the bank is ready to support its customers, including through the setting up last week of a €2m all-island Brexit fund.

Ms McDonagh said 40% of the bank’s assets are in the UK, predominantly in mortgages, and its strategy is predicated on some sort of deal and an appropriate transition period coming through.

In relation to the ongoing transformation of the business, Ms McDonagh said she has always said there will be fewer people working in the bank in the future than there were in the past, although it does not have specific future targets.

She said it has reduced its number of employees by 500 or 5% in past year, but added that this does not mean it is not recruiting.

Bank of Ireland’s results miss expectations – sending its shares lower

Earlier, Bank of Ireland reported a smaller than expected pre-tax profit for last year and missed analyst expectations – sending its shares as much as 8% lower.

Bank of Ireland said its pre-tax profits for the 12 months to the end of December eased by 2% to €835m from €852m in 2017.

Its underlying profit before tax fell by 13.3% to €935m from €1.078 billion in 2017 as its net interest margin – the difference between the average rate at which it funds itself and lends on to customers – fell to 2.2% from 2.29%.

Bank of Ireland’s NIM had stood at 2.32% 18 months ago, as the bank took advantage of the fast growing Irish economy.

The bank forecast a further decline to around 2.16% this year, though its chief financial officer Andrew Keating said it would return into “the 2.20s” in subsequent years, driven by an expected rise in interest rates.

In today’s results statement, Bank of Ireland said its operating income for last year decreased by €244m to €2.805 billion from €3.049 billion the previous year.

The bank said its Irish mortgage business performed strongly with €2.3 billion of new residential mortgage lending, up 17% on the 2017 levels.

Bank of Ireland said it had a “stable” market share of 27% and it re-entered the Irish mortgage broker market in the last quarter of 2018.

In today’s results statement, the bank said it would increase its dividend to 16 cents from 11.5 cent in 2017 – which marked its first dividend in a decade.

Its operating expenses fell by 3% last year to €1.852 billion as the bank said it continues to focus on reducing operational costs while maintaining its investment in regulatory compliance, technology and business growth.

Bank of Ireland grew its loan book in 2018 for the first time in a decade, but said competition in the UK mortgage market, which accounts for almost a third of its total book, contributed to a fall in its net interest margin (NIM), a measure of lending profitability.

“2018 has been a year of business growth, improved efficiency, and progress in the transformation of our culture, systems and business model,” Francesca McDonagh said.

Ms McDonagh said the bank is on the right track to achieve its 2021 commitments and she said she was pleased with the results for 2018.

“We are mindful of the risks and uncertainties relating to Brexit and the global economy. However, we are committed to making further progress against our strategic objectives in the year ahead,” the CEO added.

Meanwhile, Sinn Féin’s finance spokesman has said it is past time that banks, including Bank of Ireland, were made to pay tax on their profits.

The bank is obviously more than capable of paying its tax and should be made do so.

“At 12.5% the corporation tax due on €935 billion would be €117 million but the government has given the banks a facility to write off their tax liabilities over years through losses carried forward,” said Pearse Doherty.

“In other cases this period is predicted to be as long as twenty to thirty years.”

“The ordinary taxpayer facing his or her tax bill must look and wonder how the banks get away with it.”

Mr Doherty proposed a 25% cap on the losses that can be carried forward coupled with a ten year time limit.

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5G is coming: what can we expect?

This year the telecoms industry will begin the transition to new fifth-generation mobile networks – known as 5G – which is expected to one day help run everything from self-driving cars to robot surgeons.

The successor to the current 4G network technology introduced commercially in 2009 promises nearly instantaneous transfers of huge amounts of data that will likely bring major changes to an array of consumer and health products.

But it will take time for the network to be extensive enough to respond the high expectations it has raised.

Not noticeably faster at first

The first 5G compatible phones will become available in the middle of this year, but consumers will not initially notice vastly faster speeds because 5G coverage will be limited to certain cities or areas at first.

Analysts predict it will be at least a couple of years before the network’s reach will be extensive enough to let you use your 5G phone without relying on current wireless standards most of the time.

The next generation phones will be able to switch seamlessly between 4G and 5G networks for more stable service.

The first advantages of 5G will be enjoyed by telecoms operators, who will be able to offer fixed high-speed internet in countries or regions where deploying fibre is expensive.

At a later stage, 5G will be able to underpin services such as augmented reality, which would allow people for example to point a smartphone camera at a football game and see superimposed player statistics.

Connect everything

While previous cellular networks focused on mobile phones, 5G promotors say its greater transmission speed and total bandwidth will allow a ballooning number of objects such as traffic lights, crop equipment, refrigerators and other household appliances to send and receive data.

One of the biggest innovations that 5G is expected to enable are self-driving cars, because it can virtually eliminate latency – the time it takes to get a response to information sent over the network.

But self-driving cars will need 5G networks to cover large areas and mobile communications industry body GSMA, which represents 800 operators worldwide, estimates 5G will account for just 15% of total global mobile connections in 2025.

Lower latency could also help revolutionise multiplayer mobile gaming, factory robots, telemedicine and other tasks demanding a quick response – all areas where today’s 4G networks struggle or fail.

Industry impatient

Industry in particular is looking forward to 5G to reinvent manufacturing and allow it to monitor all sorts of processes.

While augmented reality and robotics are already becoming a part of everyday life in many industries, 5G has the potential to enable newer, faster production methods.

For example by using wearable technology such as augmented reality glasses in the assembly line, workers will have more information at their fingertips, potentially resulting in higher productivity.

Specialists talk of “Industry X.0”, an ongoing industrial revolution as businesses embrace and profit from constant technological change.

But governments will first need to harmonise standards for the award of so-called 5G millimetre-wave spectrum, which will carry the vast data flows needed to power connected robots and other industrial uses for the technology.

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Borrowers pay over the odds for mortgage insurance

Borrowers availing of the Government’s Rebuilding Ireland Home Loan (RIHL) are paying over the odds for mortgage protection insurance, making the loans far more expensive than originally thought.

One borrower, who didn’t wish to be named, said the high premium was making the loan – designed to help lower-­paid workers – unaffordable for him and his partner.

“We were delighted to get approval for the loan as it meant we could get an affordable mortgage, or so we thought. But we are tied into one mortgage protection provider who is charging 0.55pc of the loan amount, which works out at an extra €132 per month, up to 10 times more expensive than other providers; this makes the affordable mortgage almost unaffordable for us.”

A quotation for more comprehensive cover than that provided by the local authority policy would typically cost the same couple €74.68 with Royal London and €80.30 with Friends First. For a single person it would be just €46.01.

The Consumer Credit Act 1995 bans banks from forcing customers to use a particular insurer, but local authorities are exempt. Instead, they have a “group'”policy, underwritten by Generali, which charges 0.55pc of the decreasing loan balance to all borrowers.

The higher premiums could cost up to €18,000 extra over the term of the loan, according to broker Mike Knightson of KM Financial.

“A single person who is a non-smoker is getting crucified on this premium,” he said. “It’s scandalous. And if you miss a payment there’s a 1pc penalty charged also.”

Quotes from a range of companies show borrowers could save thousands by taking out their own life insurance, even with expensive serious illness cover built in, which pays off the loan in full if the borrower contracts a specified condition like cancer or suffers a stroke, unlike the mandatory policy which only provides cover to subsidise the loan repayments in the event of disability for a limited period.

“There is an opt-out clause for the local authority product if you have a pre-existing medical condition; you can get your own cover instead,” Mr Knightson added.

“Some people might be better off doing so as traditional policies remain in place for the full term, whereas this product can be reviewed after just three years. In fact, adverse health could see you better off financially as the Generali policy really only represents good value for older smokers.”

A spokesperson for the Government scheme said: “The local authority Mortgage Protection Insurance (MPI) is designed to provide an appropriate level of insurance cover to those who wish to avail of the RIHL.

“Standard MPI products are individually priced, based on a member’s age, amongst other factors, whereas the local authority MPI scheme is a group arrangement, offering a single group rate per €1,000 sum assured to all participants in the scheme.

“The scheme also provides other benefits over standard MPI products. These include the payment of mortgage repayments if there is a valid claim as a result of disability, an additional payment of €3,000 in the event of a member’s death, separate to life cover, and members are also covered for death up to age 75 rather than 65 as is the case under standard MPI cover.”

An RIHL typically offers up to €288,000 for those earning under €50,000 at advantageous fixed rates of 2pc-2.3pc for terms up to 30 years. Funding of €200m for the scheme for three years has been exhausted after only 12 months, with further funding now being sought.

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Brexit bill protects current VAT system for importers

The most significant new element in the Brexit Omnibus Bill published by the Government this morning is a change to VAT law which will allow companies importing from the UK to continue to pay VAT in the same way they do now.

This change will be of considerable benefit to the many Small and Medium Enterprises that trade with the UK.

Under existing laws, when the UK leaves the European Union, VAT would have to paid by importers as soon as the import lands in Ireland.

Under the changes announced today, traders would continue to make VAT returns every two months.

The potential cash flow implications of not making this change were very serious for SMEs in particular.

The VAT measure is part of a considerable number of changes to Irish tax law contained in the bill.

In the 11-page explanatory memorandum accompanying the bill, four pages are given over to tax legislation – by far the biggest amount of changes.

The change to the tax laws follow the same principle as all the other changes are by the bill – to provide for continuity of existing legal arrangements.

The changes cover laws that mention countries of the EU and European Economic Area (EEA) and effectively add the UK to that list.

The Government intends to have the legislation ready to be signed into law by the President on 29 March – should it be needed.

It hopes the UK will ratify the EU Withdrawal Agreement, which will render virtually all of this emergency legislation unnecessary.

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Pillar banks battle to keep current as online rivals play their cards

AIB has backed brave, while Bank of Ireland has sought to tug on the heartstrings of families. Permanent TSB has urged its customers to “keep going” and KBC is battling to ensure that everyone knows how easy it is to join them.

Banks have forever invested in ad campaigns. You can almost track the economic performance of the country through the tone of their marketing.

These days, if you sit on a Luas or a bus you’ll be struck by a raft of new adverts from new banks. Walk onto college campuses and you’ll find bankers that don’t look like bankers.

These ads and ambassadors tout the benefits of some of the world’s most recognisable digital banks, German fintech giant N26 and London-based disruptor Revolut. No fees, instant transfers, and some really pleasant user interfaces.

You can see why they’re already proving to be a hit here. Revolut claims to have more than 200,000 customers in Ireland, while N26 has more than two million across Europe, although the German bank has been coy on giving country-by-country breakdowns.

Efforts by the fintechs to take on the country’s pillar banks have been going on for years – in the late noughties Dublin-based money-transfer company CurrencyFair tried to take a piece of the banks’ financial pie.

“The original theory when we started was that startups were going to come and do one thing very well, for example we did foreign exchange much cheaper,” CurrencyFair founder Brett Meyer told the Sunday Independent.

“We’ve created a great benefit to some people but there are still plenty of people paying too much for transactions from banks. Margins have come down on the bank side, but they haven’t tried to get anywhere nearly as cheap as what we do. That theory that banks were going to be carved up product by product never really happened.”

Meyer, who has stepped away from the day-to-day running of CurrencyFair, built a business that has exchanged over €8bn. These days challenger banks such as Revolut and N26 are more interested in the current account market – for now at least. Both offer no monthly fees, which compares favourably to much of Ireland’s existing banks. They also offer no foreign exchange fees and don’t charge for contactless transactions.

The business model certainly seems akin to those of many tech giants which have focused heavily on getting as many users or customers in as possible. Both banks tout a “premium” subscription-based service, which offers add-ons like travel insurance.

“These challenger banks come out and in some cases do one thing for free but then they add other features, so it’s almost like they rebuilt a bank around it, which I find fascinating,” Meyer said.

“There are still question marks around the long-term viability of these challenger banks, I’m sure it’s not true of all of them. Getting customers at any cost means delivering services at below cost.”

The CurrencyFair founder, who now works as an adviser with numerous fintechs, said that in “pretty much every other area” outside of current accounts, banks collaborate with their younger peers. He also cited legacy technology as a tricky hurdle for banks to overcome.

Last month, the Sunday Independent reported that Revolut was to bring a physical presence to Ireland. Revolut said that it would also begin offering personal loans of up to €15,000 at the lowest interest rates in the market. In the past Revolut has been viewed as a “digital purse” product that goes hand-in-hand with a separate account from a pillar bank, but the company plans to change that. In December, it secured a European banking licence, allowing it to offer a much broader suite of products.

But it is not the only one that aims to put boots on the ground in Ireland.

Starling Bank, the London-based fintech, raised £75m last month to fund its own expansion. Part of that development includes a base in Dublin.

As well as current accounts, Starling also offers business accounts, joint accounts, as well as the typically intuitive user experience associated with digital banks. It was also founded by Anne Boden, the former chief operations officer of AIB.

Alex Frean, Starling’s corporate affairs chief, said that it was still in the process of applying for a banking licence here. “We are bringing genuine competition to a market that has been lacking it for so long by offering an app-based personal and business current account that is free and loaded with a host of smart money management tools,” Frean said.

“With no branch networks and no legacy IT systems to maintain, we have a much lower cost base than the legacy banks. They can try to copy our features, but they can’t copy our cost base.”

Frean said that banks had “tried to put things back to the way they were before” following the financial crisis. She said that Starling was founded because in order to build a “truly modern” bank that is customer-focused, it requires starting again “from scratch”.

Of course, Boden’s former employers dismiss this suggestion. AIB’s digital stats are impressive, boasting around 950,000 monthly active users who visit the site 36 times on average.

The bank has also begun allowing customers to open a current account on the mobile app, pushing the nightmare days of the humble card reader even further into the distant memory.

The State-controlled bank also snapped up a stake in b2b payments player TransferMate in 2017 to reduce costs on international payments. It has also opened up its online banking technology to allow external developers to build new products. As we revealed last year, AIB has been “closely looking” at a subscription model similar to that of N26 and Revolut.

Fergal Coburn, AIB’s chief digital and innovation officer, said that the bank is continuing to invest in its products.

“Our multi-product offering differentiates us from fintech providers who tend to offer consumers a single, or limited range of products,” he said.

“Over 100,000 new customers opened a current account with AIB last year and we continue to retain a market leading position. While we have seen from our data that some customers do try these fintech services, in many cases it is supplementary to their main current account and AIB remains the primary banking products and services provider.”

AIB has also done well to ensure its technological relevance, boasting services like Apple Pay, Android Pay, and Fitbit Pay. It also intends to go toe-to-toe with Revolut’s personal loans. The bank claims that more than half of all of its small loans up to €30,000 were applied for and approved through its mobile app last year. It also said that 90pc of decisions were made within three hours.

Elsewhere, KBC Bank Ireland views itself as neither a pillar bank nor a digital-only bank. It describes itself as the “best of both worlds”. In January it became the first bank in Ireland to launch multi-banking, which allows its customers with an AIB or Bank of Ireland account to check their balance on the KBC app.

It also offers no fees on its day-to-day banking services to customers that lodge a minimum of €2,500 into their account but there is no obligation to keep it there, unlike other banks.

KBC’s transformation director Kelvin Gillen said that it will move to add more and more features to its banking app as the year carries on.

“We launched the first phase of our multi-banking approach at the beginning of the year. Our ambition is to change the way that Irish people bank by providing instant, accessible financial products and services and this is a big step on our journey towards achieving this,” Gillen said.

Every Irish bank has recognised the need for change and the switch in consumer demands, especially around day-to-day transactions. Bank of Ireland is carrying out a near-€1bn digital transformation. Much of which is being spent on the bank’s ageing IT systems. Those changes have been directed to meet the needs of the new consumer.

A consumer that is spending more and more online through multiple currencies, according to AskAboutMoney’s Brendan Burgess.

“People are no-longer happy to be paying FX (foreign exchange) fees up to 2.75pc when Revolut will charge no FX fees for purchases within limits,” he said.

“The online challengers pose a huge threat but mainly amongst younger customers for now. The threat is serious and rapidly growing.”

Burgess said the country’s banks need to implement better technology and impose lower fees in order to stave off the fintech revolution. However, he did warn against jumping for the cheapest option when it comes to banking.

“People should go for the best service and not the cheapest or a free service,” he said. “Lots of people who availed of Permanent TSB’s ‘free banking’ ended up paying for it many times over with the most expensive mortgage. They paid 6pc interest when AIB and Bank of Ireland were charging 3pc.”

In Ulster Bank, transaction charges are on the way from April. The bank currently charges a monthly maintenance fee of €4 but imposes no transaction charges for the likes of ATM withdrawals.

That model will change, with the maintenance fee slipping to €2, while point-of-sale and direct debit payments fees increase to 20c. While banks are innovating to the best of their ability, the flexibility enjoyed by some of their younger competitors is a huge advantage. The user experience that Revolut and N26 boast is impressive. The speed at which transfers happen and the real-time information on transfers makes for an attractive prospect for customers.

However, should traditional banks manage to slap the same glossy finish on their products it will make for a very competitive marketplace, one that surely will benefit the consumer.

And the new arrivals are going to add some colour to the market. Revolut found itself in trouble for its “single shaming” ad over St Valentine’s Day. The digital bank apologised for running a slogan that read “To the 12,750 people who ordered a single takeaway on Valentine’s Day, you ok, Hun?”.

A marketing faux pas no doubt, but it is certainly far from the days of a man standing on the bus exclaiming that he didn’t know what a tracker mortgage was.

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Money can buy happiness – but only if you earn optimal amount

Having more money does not make you happier, according to figures released earlier this month from the UK’s Office for National Statistics (ONS). They show people there have become more anxious in recent years and have not become happier – despite seeing big jumps in disposable income and wealth.

“Despite high levels of employment, rising incomes and spending across UK households, people are not reporting increases in their well-being,” said Glenn Everett, head of inequalities with the ONS.

The ONS figures show that while there have been substantial increases in the disposable income of UK people since early 2012, people have become more anxious and are now on average only about 3pc happier than they were in 2012.

“Research has consistently shown us that while our real income levels and discretionary spending have soared over the years, our happiness levels have remained flat,” said Sibeal Wheatley, financial planning analyst at Davy Private Clients. However, even if rises in disposable income and wealth don’t lead to an increase in happiness, can we go as far as saying that money can’t buy happiness?


“Money can’t buy happiness, but it can create a secure context in which happiness is more likely to grow,” said Brendan Kelly, professor of psychiatry with Trinity College Dublin and a well-known mental health expert. “There is certainly a link between money and happiness. Poverty makes happiness very difficult. It is possible to be happy and poor, but this is difficult to sustain.”

Studies of the recent recession, for example, has shown the negative impact which a shortage of money can have on families. Many people saw their wages cut during the recession; many others saw their household income dive as a result of the unemployment of the breadwinnner.

Parents under economic strain during the recession reported more arguments, felt less close and were more likely to report that they were unhappy with their relationship, according to a study published in 2015 on the effects of the recession on families and children. The study, Growing Up In Ireland, found that such economic strain sours the relationship between partners – as well as creating harsher, less warm parenting. Such poor relationships between parents and children were found to be hugely damaging to child mental health and to increase levels of child anxiety.


Having said all this, even if there is a link between money and happiness, it’s only up to a certain point. “Once your basic needs for accommodation, food, security and so on are met, money does not increase happiness infinitely,” said Kelly. “There are diminishing returns – earning €1m when you have just €1 in the bank will make you much happier than earning €1m when you already have €100m in the bank.”

A number of studies have been conducted which have tried to pinpoint the amount of money which individuals need to earn to be happy.

For example, money can make you happy up to the point that you earn between $60,000 (€53,000) and $75,000 (€66,000) a year, according to a study published in February 2018 by Perdue University in the US state of Indiana. The study, which examined the point at which your income no longer has an effect on your emotional well-being, was based on a survey of 1.7 million people from 164 countries. The amount of money needed for people to feel happy varied depending on where the individual was from and who the individual was. However, once that amount was earned, further increases in income tended to be associated with reduced life satisfaction and lower well-being. This is because at that stage, people may have been driven by desires such as pursuing more material gains and comparing themselves to others – which could in turn lower well-being. The study also found that the amount of money needed to feel happy is higher in wealthy countries.

The findings were similar to those of another one conducted in 2010 by Princeton University. In that study, researchers put a figure of $75,000 (€66,000) a year on the amount an individual needed to earn to be happy. The lower an individual’s annual income falls below that figure, the unhappier he or she feels, found the study. However, people who earned more than €66,000 didn’t report any greater degree of happiness – no matter how much more money they earned.


Even if you’re earning enough money to meet your basic needs, the amount that your neighbour or peer earns can however have more of an impact on how satisfied you are with your income – and how happy you feel about your status in life – than the actual size of your pay packet. “A majority of people think it’s more important to earn more than their neighbour earns, rather than increase the absolute amount that they earn themselves,” said Kelly. “The root of most human happiness lies in comparing ourselves with others – or with how we imagine we should be. Money is often central to such comparisons.”

This is probably why some studies have found that income inequality can lead to unhappiness. Americans for example were on average happier in the years when there was less income inequity in the US – than in the years when there was more national income inequality, according to a study conducted by the Association for Psychological Science in the US. The study, which examined survey data from 1972 to 2008, found that Americans trusted other people less and perceived other people to be less fair in the years when there was more income inequality in the US than in the years when there was less.


Age can also come into play. “Happiness varies with age – with the youngest and oldest experiencing greatest happiness,” said Kelly.

“For many, the low point occurs in the early to mid-40s – when professional and personal lives are at their most intense, and financial demands at their highest. This U-shaped distribution of happiness across the course of life has been reported in the US, Europe, Latin America and Asia – in over 70 developing and developed nations.”

Money is one part of happiness equation

Money – or the lack of it – is just one of the things which can influence happiness. Your own personality, personal beliefs and values also have a big part to play.

“The link between money and happiness is strong but complex,” said Kelly.

“Seeking money as a route to happiness is unwise. We should look to money to bring financial security. It can be helpful for happiness too, but it is not a reliable or sustainable basis for happiness.

“A sudden health problem, for example, can impact on happiness so acutely that all the money in the world would no longer bring happiness – indeed, you would suddenly be willing to spend all your money to pay for a cure.

“Money can be a tool that we can use to help us attain greater well-being through lifestyle (such as exercise and diet), relationships with others and with the world, and meaningful activity. Happiness will follow.”


How you spend your money matters

What you spend your money on can have a big part to play in the amount of happiness it can or cannot bring. Using your money to indulge in bad habits — such as gambling and excessive drinking — will clearly make you, and others close to you, unhappy. Furthermore, buying material things is unlikely to make you happy, but spending your money on experiences could. That’s according to Eoin McGee, principal of Prosperous Financial Planning and the financial advisor on RTE’s How To Be Good With Money show. This is because an experience is likely to have a greater positive emotional impact on you than a material item.

“The anticipation of an experience, such as a holiday, is at least half of the experience itself,” said McGee. “On top of that, you have the enjoyment of the experience, and the memory of that experience. This is very different to using your money to buy something tangible. You probably don’t remember the iPhone you bought a year ago, but you would remember the holiday.”

Using your money to buy things can often trigger anxiety, according to McGee. “If you buy a brand new car, you could be worrying about scratching it,” said McGee. “If you order something online, you might worry if the item will live up to your expectations when it’s delivered. This anxiety can take the good out of buying something.”

Another way which McGee believes that money can buy happiness is if some of it is spent on others. This tallies with the findings of a study conducted in the US a few years ago. The study, by the University of British Columbia and Harvard Business School, found that spending as little as $5 (€4.40) a day on someone else could significantly boost an individual’s happiness.

Time matters

Many of today’s workers class themselves as cash-rich but time-poor. This lack of spare time can have a bad impact on health and well-being. When making decisions about money and time, it’s important to think about the long-term consequences of those decisions for your happiness, according to Dr Ashley Whillans, assistant professor at Harvard Business School in the US.

“If we choose a job in which we make a lot of money but work 80 hours a week, our personal relationships and happiness could suffer in the long-term,” said Whillans in an article published in the Harvard Business Review last month. College students who pursue careers which enable them to have more money, rather than time, experience big falls in happiness one to two years after graduation, according to research by Whillans. “Over the span of many years, the negative effects of such major life decisions could really add up,” he said.

One way to deal with the challenge of being cash-rich but time-poor is to use your money to buy more ‘happy’ time. This doesn’t just mean to go on holidays more. Whillans advises people to use their money to eliminate negative experiences from their day. Hiring a cleaner to clean your home, for example, could free up a few of your hours over the weekend. Ordering something online and paying for delivery of the item to your home could save you a few hours’ travel and shopping time. “Once you have outsourced chores, devote your new free time to things that are most likely to promote happiness, like activities with your friends and family,” said Whillans.

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