The Irish banking market is set to receive a competition boost with news from Spanish lender Bankinter that it intends to use its subsidiary Avant Money as an Irish banking branch.
The company said the move would enable it to offer a wider range of financial products and services here into the future.
Initially the new business will begin with offering deposit products, on top of the mortgages, personal loans and credit cards it currently provides, with an expectation that other services will follow.
The bank does not intend to apply for a full banking licence from the Central Bank of Ireland, but will instead use its existing Bank of Spain and European Central Bank authorisations to offer services here under EU passporting rules.
"Today's decision paves the way for the strategic expansion of our business," said Niall Corbett, CEO of Avant Money.
"This is a clear commitment to Ireland from Bankinter and we look forward to bringing even more choice, value and competition to the market. It will allow us to better meet the needs of customers by further leveraging Bankinter's innovative products and customer experience."
"We see potential for future job creation through the expansion of our operations and offerings, contributing to economic development and employment opportunities here in Ireland."
Bankinter will buy the entire shareholding of Avant Money, previously owned by its subsidiary, Bankinter Consumer Finance, making it the sole shareholder in the Irish business, it said.
It will also establish a branch here and move all the assets, liabilities, rights, obligations and legal relationships of Avant Money to it.
"It will continue the activities currently carried out by Avant Money in Ireland, with plans then to expand, initially, into the deposit market, following the necessary legal steps and regulatory approval," the Spanish bank said.
Sources confirmed that Bankinter's offering will be digital only and that it will not open any branches here.
Initially, at least, it will continue to operate under the Avant Money brand.
The development was welcomed by the Minister for Finance who said it is significant for the Irish banking market and welcome news for households, businesses and consumers.
"In 2022, my Department carried out a review of the retail banking sector in Ireland. It recognised the need to protect competition in the retail banking market to best serve consumers' interests," Michael McGrath said.
"The intention of another European bank, Bankinter, to establish a branch in Ireland to provide a range of banking products is a very welcome development in that regard," he added.
Avant arrived in Ireland in 2012 when it bought the credit card business of MBNA here.
In 2019, Bankinter bought the Avant Card business and renamed it Avant Money in 2020, the same year it began offering mortgages here.
The lender has grown rapidly in the mortgage market since then and today has a portfolio worth €2.4 billion, up 53% on a year ago.
Staff were informed of the developments this morning and the bank said there would be no changes to their current terms and conditions of employment.
It also said that existing customers will not be impacted by the changes.
Bankinter is the fifth largest bank in Spain and among the top 50 largest banks in Europe.
It has operations in Spain, Portugal, Ireland Luxembourg.
In Ireland its loan book is currently worth €3.3 billion, with €2.4 billion of that in mortgages and €900m in personal loans.
In the first three months of the year, the Irish business made a pre-tax profit of €9m and it currently has 200,000 customers here.
Bankinter made a net profit of €845m in 2023, up 51% on the previous year.
Michael Dowling, Managing Director of Dowling Financial, described today's move by Bankinter as a "very significant" intervention in Ireland's banking market.
Mr Dowling said Ireland has become used to banks leaving, such as KBC, Ulster Bank, Bank of Scotland, Danske Bank, and ACC but that now a "very significant player" was expanding here.
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"They're the fifth-largest bank in Spain, their asset size is €113 billion and they've a loan book of nearly €80 billion. This is a bank bigger than AIB or Bank of Ireland, so in terms of size, this is a very significant announcement today," he added.
Mr Dowling said mortgage rates such as Bankinter's Spanish equivalent of 2.5%, and a 30-year fixed mortgage at 2.99% has "whetted appetites" in Ireland with "those kind of rates being available."
He said there will be no branch banking from Avant Money, as "opening branches is expensive" and it "makes more sense" for them to remain digital.
He said its products will be deposits at first before it looks at the "full suite of banking products."
Mr Dowling said Bankinter has made no announcements about deposit rates of interest it might offer.
He said the bank sees Ireland as a growth market and an opportunity to expand its brand, profitably.
Brokers Ireland also said today's news from Bankinter augurs well for consumers and businesses here.
Rachel McGovern, Director of Financial Services at Brokers Ireland, said the lack of competition in the Irish banking market is widely acknowledged, with the three pillar banks holding 90% of new mortgage lending.
"If Bankinter is about to start with the deposit side of banking then they are going right to where most fat lies, with Irish people having over €150 billion on deposit, mostly in low yielding accounts, among the weakest rates in Europe," she noted.
She also said that Avant Money, Bankinter's brand in the Irish market, already has competitively priced mortgage interest rates and has retained its longer-term fixed interest rates while competitors have pulled back on the better of these in recent times.
