Bank to close by end of the year
The worst fears of 800 finance workers were realised tonight after Bank of Scotland (Ireland) (BoSI) announced it will shut its doors by the end of the year.
The company said the vast majority of employees will be transferred to an independent firm to close accounts and manage the existing €30bn loans as bosses oversee the wind-down from the UK.
Such a dramatic departure from Ireland just over a decade after it entered the market was seen as one of the biggest casualties of recession after the nationalisation of Anglo-Irish Bank.
Brian Gallagher, Unite trade union regional officer, said staff were left reeling by the closure less than six months after BoSI axed 750 jobs and moved to close its high street brand in Ireland, Halifax.
"They're very, very angry," he said.
"Six months ago one of the largest financial institutions in Europe said that their jobs were secure. At a stroke of a pen they've decided that they're not interested in Ireland any more."
Joe Higgins, BoSI chief executive, said he regretted putting staff through another tough selection processes only months since the last.
"I really regret that's the circumstances we have put them through and I've said that to them personally and face-to-face," Mr Higgins said.
Thirty-six staff face compulsory lay-off.
Some 840 staff are still employed by BoSI and management said the vast majority should secure a transfer to the independent firm in Ireland, which will oversee administration of its remaining Irish business.
It is hoped this company could run for at least seven years managing the loan book and seeking new business.
The young bank - a division of UK finance giant Lloyds Banking Group - announced plans in February to shut all 44 Halifax branches after only four years trading.
In a statement, Lloyds said there was little opportunity for BoSI to enjoy scalable growth in the future and management of the business would be transferred to Bank of Scotland. The move will see the balance sheet and loan book effectively placed on bank books outside Ireland.
Lloyds said: "This will aid the efficient rundown of the existing lending portfolio."
It also said its other business operations in the Irish Republic, an insurance operation in Shannon, and the Halifax branch network and customer service centre in Northern Ireland are unaffected.
BoSI has staff in its St Stephen's Green head office in Dublin and in regional offices in Belfast, Cork, Galway, Limerick and Waterford.
Joan Burton, finance spokeswoman with Ireland's Labour Party, said the BoSI pull-out had been an open secret.
"Despite repeated government assurances that they have Ireland's banking problem under control, many foreign retail banks operating in the country are anxious to curtail their activities here," she said.
"At this stage, many just want to cut their losses and would sell out in an instant if they could find a buyer."
Mr Gallagher added: "There was so much hope when BoSI was established.
"So many promises that persuaded people to come on board and lay the foundation for a long career. Those promises now lie like dust and the future for 800 staff is clouded by uncertainty.
"The bank, one of the largest financial institutions in Europe, has moral, legal, personal and financial obligations towards its loyal staff in Ireland."
BoSI has a loan book of about €30bn and 150,000 customer accounts.
The average life of a loan in BoSI is eight to 10 years, with some bigger borrowings running for 30 years.
According to the most up-to-date figures from the bank, it had €14.2bn of impaired loans at the end of June this year. It had written off €1.8bn of loans.
The bank plans to return deposits to customers as the wind-down takes full effect towards the end of the year.
Ireland's Central Bank and Financial Regulator said BoSI must ensure customers' rights are protected and they are treated honestly and fairly during the closure.
The watchdog said customers should be informed of how the changes will affect them from the end of September.
Mark Fielding, head of the Irish Small and Medium Enterprises, said: "Assurances need to be provided for existing customers' current funding requirements.
"Secondly, it restricts all SME's options in attempting to secure finance in an already shrinking banking market.
"Thirdly, reduced competition will result in increased bank interest and charges for already hard-pressed bank customers."
Arthur Morgan, Sinn Fein finance spokesman, said: "With the departure of another banking entity from Ireland, there is less competition amongst banks and there is an inherent danger that a few banks will have a monopoly over the Irish market."