The impending departure of two banks from the market here and the move by lenders to cut staff numbers presents a challenge to many businesses.

This is according to a treasury specialist who deals with corporates on their financing and risk management needs.

John Finn, Managing Director of Treasury Solutions said firms that have loans of between €2 million and €10 million would be at a particular disadvantage in a new, much scaled-back banking environment

"If you're more than €10 million, you're in the corporate banking scene and you get a personalised service. If you're less than €2 million, you're in the SME space," he said.

"That €2 million to €10 million space is where you need better customer service, but the banks are cutting staff," he added.

"There are a number of areas of the economy that are suffering and will continue to suffer unless Permanent TSB emerges as a third banking force."

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Permanent TSB, in an interim statement on its first quarter performance this morning, said negotiations with NatWest on acquiring parts of Ulster Bank's Retail and SME business were continuing but that there could be 'no certainty' of any acquisition until the talks have ended.

John Finn said businesses in the hospitality sector that are customers of KBC and Ulster Bank could be in a particularly difficult position looking for a new bank as they emerge from the pandemic closures.

"They'll need a good summer to be able to show that they have good accounts to move to another bank," he said.

"Deposits will be a problem (for all businesses) because banks don't want them and there are negative deposit rates pretty much everywhere."

He said inflation was an issue that was likely to become more pressing in the months and years ahead and especially so for the Irish economy.

"You just have to look back to where we were the early noughties. We're performing well economically vis-à-vis the rest of Europe, so demand is strong," John Finn said.

We've seen inflationary pressure. That would tend to lead to an increase in interest rates, but if the euro zone is not growing as fast, they may not rise as quickly here, so it's a challenge for the government," he explained.

Inflation has arisen as a particular concern in the US where the Biden administration has been pumping trillions of dollars into the economy to help it to recover in the aftermath of the pandemic.

Treasury Secretary Janet Yellen conceded yesterday that the interest rates may have to rise in the US to prevent the economy from overheating.

She later clarified her remarks saying she didn't believe that there was an 'inflationary problem' brewing.