Bank of Ireland Private merger causes client scramble
Bank of Ireland's decision to bring its private banking division in-house has forced the lender to abruptly ditch a string of life and pension policies which may have accounted for close to 10pc of the unit's revenue.
In June, Bank of Ireland folded Bank of Ireland Private into the group, eliminating its status as a separate legal entity. The move has curtailed the subsidiary's product offering and, according to sources close to the group, prompted a scramble to retain the life and pensions business of wealthy clients.
As a stand-alone company, Bank of Ireland Private offered its cashed-up customers a suite of externally-provided asset-management products.
Once merged with its parent, however, the division became a tied agent of New Ireland, prohibiting Bank of Ireland Private from continuing to offer externally underwritten life and pension policies. Sources close to the division said clients were notified of this change around the time of the merger, raising questions from some quarters as to why client negotiations to explore alternative arrangements were not started sooner.
It's understood that these life and pension products, for which Bank of Ireland would have received a rebate, accounted for close to 10pc of the unit's revenue.
Bank of Ireland declined to clarify the precise income generated by these non-investment products. A spokesman said the lender "updated customers in August that following the merger, Bank of Ireland Private, as a tied agent of New Ireland, cannot act as agent for life and pension policies underwritten by third-party providers, which had become a small part of the business in recent years".
He said "existing customers with third-party life and pension policies can switch to a similar New Ireland policy or allow their existing provider to service the policy directly" and added "we are working with clients to help them with the most appropriate action".
While Bank of Ireland Private can continue offering investment products from third-party providers, it may not be able to persuade wealthy clients to liquidate life and pension policies from third-party providers and accept a New Ireland product.