Thursday 18 January 2018

Unions want state control of BoI’s €2.2bn UK business

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Donal O'Donovan

Donal O'Donovan

Postal unions in Britain want the government there to scrap Bank of Ireland’s deal to provide banking serves through the UK Post Office.

A report by Cass Business School for the UK Communications Workers Union (CWU) argued that the UK government should set up its own Postbank service to replace Bank of Ireland.

Owen Callan of Investec said the report suggests would cost as much as £2bn (€2.2bn) to buy out Bank of Ireland’s stake in the Post Office partnership, but that would in turn boost profits at the Post Office network longer term.

That would be bad news for Bank of Ireland, he said.

“We would view Bank of Ireland’s UK business as a key long term strategic asset, particularly given the experience of incoming CEO Francesca McDonagh who may seek to expand it further. The partnership with the PO is a very important element of their overall UK business, in terms of access to customer deposits without the need for a stand-alone bank network in the UK, and any suggestions that this may be under threat would obviously be a concern,” Callan said. 

He said he was sceptical that the UK’s current Conservative government would be supporters of a Postbank plan, and so do not see this is a near term risk. In the longer term however, a potential Labour government in Britain, especially one led by left winger Jeremy Corbyn, could be more likely to back greater state involvement in banking.

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