Saturday 24 February 2018

BoSI will either sell or outsource €10bn in loans as it winds down

Joe Brennan

Bank of Scotland (Ireland) (BoSI) may sell or outsource the management of parts of the mortgage-dominated retail loan book which the bank has signalled it is winding down, the Irish Independent has learned.

The Lloyds Banking Group unit announced on Tuesday it was closing the operations of its 44-branch Halifax and intermediary banking business, run under the BoSI banner -- with 750 jobs going in the process.

The decision means that BoSI will run down about €10bn of mostly residential mortgages -- or almost a third of its total portfolio -- as it pulls out of the retail banking market.

Reliable sources said yesterday that BoSI would consider deals for other Irish lenders to either acquire parts of the loan book or administer part of it for the UK-owned lender on a fee-per-account-managed basis.

However, they said that deeply-discounted offers from other institutions would likely be rebuffed.

The Financial Regulator said this week that it would work with BoSI to ensure that customers' interests were protected in accordance with the Consumer Protection Code where mortgages, personal loans and fixed-rate savings are required to run to maturity. Industry observers have tipped Irish Life & Permanent (IL&P) as being best placed to move in and take on a large part of BoSI's €10bn book, though they said that other lenders were also likely to run the rule over potential deals.

Abortive

BoSI made an abortive attempt in recent months to pursue a tie-up deal with IL&P's Permanent TSB unit as a way of accessing the so-called "third force" in Irish banking.

EBS and Irish Nationwide are already in formal merger talks and Permanent TSB hopes it can do a deal with the merged entity at a later stage.

Meanwhile, BoSI's chief executive Joe Higgins hinted at a press conference on Tuesday that the bank may be amenable to offloading its current account book to another institution. "We will continue to look at options in that regard. "We will want the best possible outcome for these customers," Mr Higgins said.

However, other banking figures said it is likely that rival banks will look to cannibalise BoSI's current account business as the bank closes these down over the next three months.

"The value of the current account business starts falling from the day you announce you are getting out of the business," said one senior banker.

Irish Independent

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