Buyers may be deterred by price tag
Published 17/08/2011 | 05:00
IT is early days for the fate of the 1,000 jobs at MBNA to be decided -- but the uncertainty in Carrick-on-Shannon is in stark contrast to the swift transaction in Canada.
Bank of America is still in the very early stages of getting out of MBNA -- already it has managed to sell its MBNA Canada business to Toronto Dominion Bank -- but finding an Irish buyer for the operation here is unlikely, given the state of our banking system.
The other big problem for Carrick-on-Shannon staff at the moment is that it remains unknown what form a sale of the business would take.
The presumption is that the bank will look to sell the Irish operation as a going concern -- but it could try to offload the loan book separately to the call centre.
If either of those options did not work out as the bank wanted, then it could consider closing the business and retaining staff to wind down the existing loan book in a similar arrangement to that of Anglo Irish Bank.
These are just some of the complications that will need to be ironed out internally by Bank of America before it looks at selling the business.
The higher cost base associated with Ireland and the western world in general would be another obstacle to any potential sale of MBNA Ireland.
Many multinationals have shifted their call centres and customer-service operations to eastern Europe and Asia.
Despite those issues, the Carrick offices may still prove attractive to a new investor. The conditions that attract overseas investment to Ireland -- low corporation tax, a highly educated, English-speaking workforce and a secure domestic environment -- all still exist.
However, the valuation that Bank of America puts on the business may be a contentious issue for potential buyers.
It paid $35bn (€24.3bn) for MBNA worldwide at the height of the credit boom in 2006. There is little hope of anything like that price being recouped as it breaks up the business and sells it off.
The North Carolina-based bank needs to decide what is a reasonable price for the Irish operation. Up to 1,000 jobs depend on it.