Upward pressure on interest rates and banking fees in the medium term will be likely impact of Ulster Bank's decision to withdraw from the Irish market.

The withdrawal of the third biggest lender from the market will reduce competition, particularly in the SME sector where Bank of Ireland and AIB are the main alternative credit providers.

Price comparison website bonkers.ie described the move as a body blow for consumers and competition, adding that the withdrawal was 'the last thing we needed'.

However, Daragh Cassidy, Head of Communications with bonkers.ie pointed out that there was still plenty of choice for consumers in the market and that Ulster Bank customers should survey the landscape before making any decisions.

"Even after Ulster Bank's exit, there are nine other current account providers in Ireland, several credit card providers and nine other mortgage lenders," he said.

Trevor Grant, Chair of the Association of Irish Mortgage Advisors said the news of Ulster Bank's phased withdrawal was disappointing from a consumer perspective as it removes one lender from their choice of providers.

However, he pointed out that there had been new entrants to the mortgage market in recent years and more could come.

"The ante has been upped in recent years as far as competition on rates and product is concerned, through the offerings of Finance Ireland, Dilosk/ICS and Avant Money, all of which has been excellent news for consumers.

"Further new entrants to the mortgage market may arrive within the next 12 to 18 months," he said.

Consumer advocate Brendan Burgess of the Fair Mortgage Rates Campaign called for any move by majority state-owned Permanent TSB to take over performing home loans from Ulster Bank to be blocked.

"After the financial crisis, permanent tsb pushed up their Standard Variable Rate to 6.25% when AIB and Bank of Ireland were charging 3% and 3.25% respectively," he said. 

"They only brought rates down after a long concerted campaign by permanent tsb mortgage holders."

Mr Burgess pointed out that, until the arrival of Avant to the market, Ulster Bank had the lowest fixed rates on the market.

"Ulster Bank has always been a fair lender. They were the first lender to publicly commit to allowing existing customers to move to the lower rates on offer to new customers. They never engaged in cash back which distorts the market," he said.

Banks to 'run a mile' from savings

For those with savings, the prospects are not so bright.

The European Central Bank has been levying negative interest rates on bank deposits for the past seven years.

So far, they've extended them only to institutional and corporate customers.

However, with €21.6 billion of deposits departing Ulster Bank accounts in the coming years, that situation could be about to change.

"Most banks are likely to run a mile from any new savings so it'll be interesting to see how the sector handles billions of euro all looking for a new home," Daragh Cassidy said.

"Unfortunately a consequence of Ulster Bank's exit is that it is likely to herald the arrival of more widespread negative interest rates and I’d encourage savers to think about other options for their savings such as topping up their pension or paying off any existing debt that they have," he said.

It's expected that the banks will offer low risk investment products to savers with large deposits as a means of avoiding negative interest rates in the future.