Bank of Scotland (Ireland) Limited has informed the Central Bank and Financial Regulator that its shareholder, Lloyds Banking Group, has decided to exit the Irish market. The bank had shook up the Irish mortgage market from 1999.

Bank of Scotland entered the Irish market in late 1999  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.

 Bank of Scotland (Ireland) announced today it will no longer offer banking activities in Ireland from the end of December 2010.It has advised the Central Bank and Financial Regulator that it intends to cease operating as an Irish licensed bank by December 31, 2010 and the business of Bank of Scotland (Ireland) will be transferred to its parent Bank of Scotland (UK). This decision follows a commercial review of Bank of Scotland (Ireland) by Lloyds Banking Group following the closure of the Halifax retail banking business and the Bank of Scotland (Ireland) intermediary business.

Under the EU Cross Border Merger Regulations, the business of Bank of Scotland (Ireland) will transfer to Bank of Scotland (UK) which is licensed and regulated by the UK Financial Services Authority. Bank of Scotland (Ireland) must ensure that customers’ rights are protected and treat their customers honestly and fairly during the process and ensure that all relevant regulatory requirements are complied with.

Bank of Scotland (Ireland) has advised that it will begin writing to customers by the end of September 2010 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 would recommend that customers read the details very carefully.

Customers with any concerns or questions about their accounts are advised to contact Bank of Scotland (Ireland) directly on 1890 818181 or at www.bankofscotland.ie.

Bank of Scotland Ireland announced last February that it would cut 750 jobs from its Irish workforce of 1,600, with most of the redundancies due to take effect by July. The bank planned to close down the retail network of 44 branches which it operated under the Halifax brand. It had  850 jobs in its corporate and commercial banking sections.

Today's move will result in 36 redundancies, and the bank says the vast majority of its staff, which numbers over 800, and handle local administrative activities, will be transferred to a new, managed services company. This in turn will be wound down over the coming number of years as the loan book shrinks.

Mark Duffy resigned as chief executive in early 2009 after the bank became over-exposed during the property boom: The sale of HBOS to Lloyds TSB and the successful completion of the Halifax Retail project in Ireland offers me a natural point at which to leave and to afford the Group a smooth transition. There is no story or big reason, just a personal desire to take some leave and do something else.”

Duffy was in charge of the Irish operation for 16 years and the The Irish Times reported that it was understood that he had agreed a multi-million euro pay-out with the bank.