KBC investments are disappearing from the Irish landscape. The bank is heading for the exit, and people in Ireland who have invested their savings with them have decisions to make. If you have a regular or lump sum investment with KBC Bank, what should you do? We outline your options.
This article is on regular and lump sum investments with KBC. If you have a pension with KBC, you’ll find relevant information here.
So long KBC investments
KBC once looked like one of the more interesting investment offerings from the Irish banks. With their Sivek funds and more recently their ExpertEase Socially Responsible Investment funds, they were offering something different.
But all that will be swept away with KBC’s agreement to sell most of its loans and deposits to Bank of Ireland (subject to Central Bank approval), and exit the Irish market altogether.
This week KBC customers received notice that no new investments could be made from 7 December. On top of that, regular monthly contributions to existing investments will be cancelled from 12 January 2022.
What happens my existing KBC investments?
For now – nothing. But assuming the Bank of Ireland deal goes ahead, the plan is that your investment will automatically be sold, at a time of their deciding. You’ll be given 60 days’ notice before this occurs.
There are a few things to think about here.
- You’ve no control over the timing of your investment
Many people who invested with KBC didn’t intend to sell anytime soon. After all, these investments were marketed as being for the long term. What’s more, unless you take action to sell your investments yourself, the timing will be decided for you. Who knows what market sentiment may be on the day the bank takes that decision?
KBC investments are subject to exit tax. This is paid on gains when you sell, and every 8 years if you don’t. For many KBC customers, the forced disposal of your investments will trigger a tax charge much earlier than planned. For some KBC customers this will also require self-assessment and reporting directly to Revenue on the gains (if you’ve invested in KBC’s offshore Sivek funds).
- Cost of reinvesting
KBC is well aware that its customers will now likely face a cost to reinvest. So they are offering a 1% top-up on the exit value of your investment. It’s unclear if that 1% will also be taxed. But even if it doesn’t, it will do no more than cover the 1% government levy that most customers will face if they reinvest using life-assurance company funds.
KBC have also confirmed that no exit charges will apply to the investments sold (well – anything different would have been outrageous).
Should you sell your KBC investments now?
For most people, moving their KBC investment now rather than later looks like the right approach. Why?
1. You’ll have time to put in place a better alternative
Firstly, you’ll have time to identify better options and take charge of the process yourself. You can control the timing of when your investment is sold, and be confident that there will be a team at KBC to actually put your instructions into practice.
2. Your regular savings will continue
Secondly, if you have a regular savings plan, it will only be topped up for two more months. Moving to a new provider now will keep your financial plan on track.
3. No advantage to waiting
Thirdly, there’s no obvious advantage to hanging on. KBC has confirmed the 1% top-up payment will be applied whether you leave now or in a couple of months. Who wants to be part of a rush to exit at the end, when there will likely be lots of people waiting for their money, a small team at the bank to make it happen, and KBC Hubs may be closed?