Bank of Ireland shares surged on Friday after it extended its partnership with the UK Post Office until at least the end of 2026.
The tie-up “will continue to focus on providing an exclusive Post Office branded range of savings, mortgages and personal loans” to about 2.1 million Post Office customers in the UK. The partnership includes 50/50 joint venture, First Rate Exchange Services, the UK’s biggest consumer foreign exchange provider.
Bank of Ireland has more than three million UK customers across its businesses there.
In May the bank appointed Ian McLaughlin to head its UK arm, he was previously Royal Bank of Scotland’s managing director of home buying and specialist banking.
At an investor day last year Bank of Ireland CEO Francesca McDonagh outlined a strategy to double returns generated by its Retail UK arm, which has been followed by exits from its UK credit card business and UK Post Office current account business.
The new Post Office structure moves from a commission-based agreement to sharing returns. That is better for Bank of Ireland, Davy Stockbrokers said.
“We understand that the new agreement moves away from a commission payment structure where the Post Office receives payments based on product sales to one that is based on returns generated by the partnership," Davy’s Diarmuid Sheridan and Stephen Lyons said in a note to clients.
"In addition, we understand that the new agreement will provide better optionality to BOI in the future as the asset and liability mix included in the partnership has been redefined, providing a better balance if the partnership was not extended.”
Bank of Ireland shares were up 5.4pc by Friday afternoon, at €3.58 each, one of the steepest climbers among Irish listed shares.