CBI defends capital easing calls amid competition debate

The research (61-page / 1.9MB PDF), published by the CBI on 7 May, found that when non-bank lenders (NBL), foreign banks and credit unions are included alongside domestic retail banks, new business lending is 50% less concentrated and concentration in consumer credit falls by around 80%.

These findings challenge ongoing concerns that the 2023 exit of two high-profile banks have reduced competition conditions in Ireland’s financial services sector and support a more “holistic” assessment of the country’s credit landscape that recognises the critical role played by foreign banks, NBLs and credit unions.

The data also identified that one-third of Irish firms – roughly 40% of which are small-medium enterprises (SMEs) – borrow from multiple lenders, which include core domestic banking lenders alongside non-bank credit.

The research draws on granular loan-level data from Ireland’s Central Credit Register (CCR), which records information about all credit contracts and loans of €500 or more made to Irish residents or governed by Irish law, including those originated by domestic banks, foreign banks, NBLs and credit unions. The data spans nearly seven million new term loan originations taken out between 2019 and 2025.

Commenting on the findings, Lisa Carty, a dispute resolution expert with Pinsent Masons in Dublin, said: “The CBI’s latest research provides an important evidential backdrop to the ongoing policy debate on competition and regulation in Ireland’s financial services sector. By demonstrating that the lending market is more diverse and competitive than a narrow focus on the domestic retail banks suggests, the case for regulatory loosening framed around a perceived lack of competition is undermined.”

Against this backdrop, the CBI has also pushed back on industry calls to reform the regulatory framework and ease capital lending requirements.

In a recent speech delivered to the Banking and Payments Federation, deputy governor Mary-Elizabeth McMunn emphasised that the CBI’s core role remains maintaining financial stability, ensuring resilience in the banking system, and protecting consumers.

In particular, she rejected arguments for reducing capital requirements or introducing a mandate that would require the CBI to consider the competitiveness and growth of the financial services sector. She said the banking sector still had “significant headroom” above regulatory requirements – over 600 basis points (bps) in Ireland and nearly 500bps in the EU – meaning capital requirements were “far from binding”, leaving banks with “ample additional capital to support additional new lending.”

She said this data indicated capital requirements were not currently “unduly constraining credit to the real economy” in Ireland and rejected calls more broadly for financial regulators to be given a competitiveness mandate akin to the UK’s Financial Conduct Authority.

McMunn added that the CBI would continue to support the market’s competitiveness by “delivering robust, clear and predictable regulation, including through considering the costs and benefits of regulatory interventions, as well as effective and efficient supervision and a clear, transparent and timely authorisation process.”

She also said competition and innovation “subject to appropriate guardrails” were both “clearly in the best interests of consumers and the wider economy.”

Carty said McMunn’s comments clearly set out the regulator’s position on a potential competitiveness mandate. “The CBI’s clear rejection of calls for reduced capital requirements or a formal competitiveness mandate is significant,” she said. “It also reinforces that, from a regulatory perspective, financial stability and consumer protection remain the primary objectives.”