Bank of Scotland Ireland is to cut 750 jobs from its Irish workforce of 1,600, with most of the redundancies due to take effect by July. The bank plans to close down the retail network which it operates under the Halifax brand. But it is expected that 850 jobs will remain in the corporate and commercial banking sections. The entry to the Irish mortgage market in 1999 resulted in significant competition for existing players.
The bank which operates 44 retail branches in Ireland under the Halifax brand, unexpectedly announced its decision to staff this afternoon. BoSI is owned by Lloyds which merged with the ailing Halifax Bank of Scotland (HBOS) in late 2008, with UK government support, said the move was part of a reorganisation of its business which will see it focus solely on the corporate and commercial side of its business here.
The 750 job losses are expected to comprise 400 from the bank’s branch network, 220 from associated services in Dublin and a further 130 from a customer service centre in Dundalk. The bank plans to commence the redundancy process at the end of May and have it completed by July this year. Unite, the trade union which represents workers at Bank of Scotland, said it was “shocked and dismayed” at the move.
“This is a crazy decision to take at such short notice when the prospect of a third banking force in Ireland of which Bank of Scotland (Ireland) could be a huge part is still very much in the mix,”union spokesman Robert Harnett said.
BoSI plans to concentrate on business lending. It moved to Ireland when it acquired the State-owned ICC Bank, which specialised in lending to companies.
It provided competition to Irish banks in the residential mortgage by cutting rates.
Other Lloyds Banking Group businesses in the Republic, which include Halifax Insurance and Assurance in Shannon and the Scottish Widow operation in Dublin, are not affected. and Halifax branches in Northern Ireland are alsonot affected.
Frank Conway, director of Irish Mortgage Corporation, commented: "It is with regret that we learn of the banks decision to close their branch network and intermediary division.
Todays announcement by Bank of Scotland is not unexpected. The bank has effectively been closed for new business in excess of a year so there has been some concern whether or not the bank could return to full lending in light of developments in the UK and the intervention by the Government there.
Bank of Scotland entered the Irish market in late 1999 with a hail of glory through the broker channel and with 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. It is ironic that BoSI today offers the most expensive deals in the market. A 5-year fixed rate mortgage with BoSI will cost 7.75%.
BoSI entered the market with relative ease through the broker channel with bank office operations functioning out of Edinburgh.
It was also BoSI that led the charge with the introduction of competitive tracker mortgage deals.
BoSI built a significant loan portfolio where many mortgages were offered on an INTEREST-ONLY basis for the full term of the loan. For residential mortgages, this could have meant loans of up to 35 or 40 years. They also offered interest only facilities on RIPs (Residential Investment Properties) for the full term of the loan."
