THE CHIEF executive of Danske Bank, owner of National Irish Bank (NIB), says it would not consider setting up an internet-only banking service in Ireland until broadband penetration in the Republic increases.
Peter Straarup said Danske had launched an internet-only banking service to customers in its home market in Denmark, offering credit cards and free banking.
"Once internet penetration becomes higher in this country, that could also be a product that we will send over. That will require internet penetration to be a little bit higher."
He said the use of internet banking and automatic payments in Ireland was much lower than among the Scandinavian banks.
"The efficiency of Irish banking is not at a high level, compared to the Scandinavian and Nordic banks, but that will change. It's a development that has to run its course. As broadband penetration becomes more and more the rule here, you will also see more internet bank use and most likely more automatic payments and less cheques," he said. There are more than two million internet bank accounts in Denmark, which has a population of 5.4 million.
Mr Straarup, who has worked for Danske for 40 years, said the bank had made an impact in Ireland since it purchased NIB three years ago. He said that, prior to the acquisition, NIB had been beset with problems relating to Government-led inquiries into the bank. "We feel we have made an impact and we are certainly also satisfied with having made this acquisition. Let your mind wander back three years and think about NIB and a brand that was, if not in tatters, in some kind of doubt as to its ability to perform. Look at it today - it is a well-placed and well-regarded institution."
Mr Straarup said he believed the Irish market had become more competitive and that Danske had helped NIB introduce more "product ingenuity" by pushing new offers such as its low loan-to-value mortgages in the market.
"It can do much better, but things take time."
Mr Straarup said the Irish economy was going through a slowdown phase but was "too resilient to fall into a black hole". He said that after 10-15 years of rising property prices, it would be "quite exciting" to see how Ireland copes with falling property values.
"That will test the system. It will create some losses and some negative situations, and slow down the market for a while. Is it the end of the world? No."
He said the bank expected economic growth of more than 2 per cent this year, but he does not anticipate construction activity increasing again in 2009 or 2010.
"Ireland has the fragility of such a strong expansion in house prices which has run its course now and you are even seeing declines in house prices, so the economy has to digest that. And that's what you see in the growth figures. The big question is, how will the second half of 2008 and 2009 look?"
Danske has total assets of €400 billion and a market capitalisation of almost €20 billion, making it roughly 1.25 times the size of AIB, Ireland's largest bank. It also has banking operations in Norway, Sweden and the Baltic states.
