Business Irish

Monday 22 May 2017

Bank of Scotland (Ireland) to shut its Halifax outlets

Maurice Pratt, chairman of BOSI, and Mike Wooderson, MD, International Banking, Lloyds Banking Group yesterday
Maurice Pratt, chairman of BOSI, and Mike Wooderson, MD, International Banking, Lloyds Banking Group yesterday

Joe Brennan

Bank of Scotland (Ireland) yesterday unveiled a dramatic retrenchment, with plans to shut down its 44-branch Halifax network and other retail businesses, after its efforts to muscle into a 'third force' merger of the country's smaller lenders failed.

About 750 of BoSI's 1,600-strong workforce will be laid off as a result, the vast majority by compulsory redundancy.

The bank, a unit of Lloyds Banking Group since its rescue takeover of HBOS in late 2008, had been carrying out a review of its operations since early last year. Lloyds has pumped almost €3.5bn into BoSI since then as loan losses on its estimated €12bn property and construction loan book spiral.

BoSI withdrew all Halifax retail products, such as mortgages, current accounts and personal loans, and intermediary products, including mortgages, motor finance and commercial asset finance, to new customers from yesterday. It will be writing to customers over the coming weeks to explain what steps they should take.

All told, some €10bn of retail loans will be run down over time, even as the bank continues to honour the terms of existing loans.

Joe Higgins, chief executive of BoSI, insisted to the Irish Independent yesterday that the bank "remains very committed to its remaining 850 jobs and 12,000 business banking customers" -- a legacy of its 2001 takeover of state-owned industrial lender ICC. "It's a case of going back to the future," he said. He added: "It is our greatest area of expertise and one which has a deep and developed customer base. To focus on this business is the right strategy for the company and all stakeholders."

The SME loan book is estimated to stand at about €10bn.

Many of the property and development loans are now being managed in a so-called business support unit headed up by Robin Fanner, who was recently brought over from Lloyds.

Mr Higgins said the "sharp and sustained deterioration in the Irish economy", while the retail operations were still in a start-up phase, meant it it could not achieve break-even or profit in a realistic timeframe.

Target

He said that hitting this target was "dependent on a growing market and free availability of funding -- both of which are now gone for the foreseeable future".

BoSI unveiled an assault on the Irish high street at the height of the boom in 2005 when it acquired the ESB's 54-branch network around the country for €120m and started re-branding the locations under the Halifax banner. Mr Higgins abandoned a previous plan to make a similar announcement last summer, telling staff of a "significant development". It is understood that management believed at the time the bank could take part in consolidation among second-tier lenders.

BoSI approached the Government and was told to approach Irish Life & Permanent, according to sources, ahead of a second-stage deal with a combined EBS and Irish Nationwide, which are currently in formal tie-up talks.

BoSI chairman Maurice Pratt insisted yesterday that the review was spearheaded by Mr Higgins and the Irish management team, and not under the direction of Lloyds.

Some sources have suggested that Lloyds, which pumped a fresh €2bn into BoSI just before Christmas, ahead of its upcoming figures, had been lining up a London-based private equity firm to help participate in a tie-up between the Irish bank and Permanent TSB, a unit of IL&P.

It is understood that IL&P had made it clear in recent weeks that it was not willing to proceed with such a scenario. Both groups declined to comment.

Irish Independent

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