British bank becomes second foreign bank to leave Ireland

Written by Ray Clancy

Friday, 20 August 2010 08:28

A bank which is widely regarded as having shaken up the mortgage market in Ireland by introducing more competitive deals, is to leave the market, it has been announced.

Bank of Scotland (Ireland) Limited said it will cease offering banking activities in Ireland from the end of December 2020 and has advised the Central Bank and Financial Regulator that the business will be transferred to its parent company in the UK.

The bank entered the Irish market in late 1999 and quickly offered very competitive mortgage deals that turned the Irish banking sector on its head. At the time, they undercut their Irish rivals with variable rate mortgage deals that were about 1% cheaper than domestic bank offers.

The decision followed a strategic review of its operations by its parent company, Lloyds Banking Group which found ‘there was little opportunity for scalable growth in the future’.

The company said it will begin writing to customers by the end of September to set out how the changes will affect them and to explain the next steps that they may need to take. The implications will vary depending on the type of account or product customers may hold and the Central Bank and Financial Regulator said it recommends that customers read the details very carefully.

The bank has 150,000 Irish customers and a loan book of €30 billion. Like other banks, it was badly hit by the Irish property crash. Lloyds said earlier this month that 90% of its Irish commercial property loan book of €13.3 billion was now impaired.

Last February Bank of Scotland (Ireland) announced that it would cut 750 jobs from its Irish workforce of 1,600, with most of the redundancies due to take effect by July. It also closed the retail network of 44 branches which it operated under the Halifax brand.

The decision to quit the Irish market will result in 36 redundancies but the bank said that the vast majority of its staff, which numbers over 800 and handle local administrative activities, will be transferred to a new managed services company which will be wound down over the next few years as the loan book shrinks.

It is not the first foreign bank to quit Ireland. In February BNP Paribas, the French bank, announced it was winding down its Postbank joint venture with An Post, the Irish post office.