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UK Post Office set to roll out BoI current accounts

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Post Office is to launch into the current account market this spring, as part of plans to beef up its presence on the high street as a major financial services provider. Photo: PA

Post Office is to launch into the current account market this spring, as part of plans to beef up its presence on the high street as a major financial services provider. Photo: PA

Post Office is to launch into the current account market this spring, as part of plans to beef up its presence on the high street as a major financial services provider. Photo: PA

BANK of Ireland is poised for what could be a major expansion of its UK operations after the UK Post Office announced plans to offer current accounts to customers.

The UK Post Office offers its financial services, including the new current accounts, through a joint venture with the Irish bank.

The post office said it plans to roll out current accounts for post office customers through nearly 12,000 British branches, starting this spring.

The scheme will initially be launched on a pilot basis.

Deposits placed with the joint venture are held on Bank of Ireland's balance sheet through its UK subsidiary.

The joint venture between Bank of Ireland and the UK Post Office has been running since 2004. They already offer services like savings accounts and mortgages and have 2.8 million customers and £17bn (€20bn) worth of deposits.

Plans to offer current accounts have been in the works for four years.

Stockbroker Goodbody says those deposits have proved an important driver of deposit growth for Bank of Ireland especially towards the end of 2011.

Benefits

Bank of Ireland has benefited from the joint venture because the post office has more branches than any other UK financial institution.

It serves 20 million customers every week and half of all small businesses.

The post office is state-owned and has made a commitment not to shut any more of its branches.

The new current accounts will be launched under the UK Post Office brand.

As an institution the post office enjoys high levels of trust among the UK public.

In a statement, the UK Post Office said it "sits at the heart of many communities across the country" and that 99.7pc of the total population live within three miles of a post office.

The pilot scheme is the UK post office's first move into the current account market.

Current accounts are regarded as crucial in terms of selling other products, such as savings accounts and loans to customers.

The Bank of Ireland/UK Post Office joint venture has a mortgage book worth £3bn, as well as motor, home and life insurance, credit cards and 2,100 ATMs.

It says it is the UK market leader in foreign exchange products.

The post office said it has its eye on becoming one of Britain's biggest financial services providers.

Britain's biggest five banks – Lloyds, Barclays, RBS, HSBC and Santander UK – control 83pc of retail accounts. Politicians and regulators are keen for competitors to emerge to challenge that dominance.

The current account will initially launch in a small number of post office branches before a wider roll-out planned for 2014.

Other companies with significant branch networks, like retailers, are also expanding into banking.

Marks & Spencer is opening M&S banking branches within its stores in partnership with HSBC, while Tesco is also set to launch a current-account offering.

Shares in Bank of Ireland closed up 1.2pc at 16.8 cent each.

(Additional reporting Reuters)

Irish Independent