An Post is to enter exclusive negotiations with Fortis, the Belgian-Dutch financial services group, on the formation of a new banking operation. The Government - who are the controlling shareholder in An Post - gave its approval for the talks yesterday.
An Post said last night that Fortis "emerged as the preferred partner based on their financial proposition, proposed strategy and their particular expertise in postal banking".
Fortis has a market capitalisation of €37 billion and is involved in both banking and insurance. It ranks among the 20 largest financial institutions in Europe, with a presence in 44 countries and a workforce of 56,000.
"Assuming successful conclusion of negotiations regarding product specifics and retail strategy, An Post and Fortis expect to bring products to the market early next year," according to the statement. An Post already sells a range of insurance, saving and investment products through its One Direct subsidiary.
"An Post has a unique role in providing a broad range of services to Irish people of all ages and backgrounds. We expect to continue this proud tradition through the provision of a suite of financial products that will be relevant and accessible to all customers including the significant portion of Irish consumers who are currently unbanked," it said in a statement attributed to chief executive, Donal Curtin. Mr Curtin is due to leave An Post next July.
The statement said An Post now has the opportunity to generate a "substantial and strategically important" new revenue stream, which would support its network of urban and rural post offices. "This will secure and grow the future income of dedicated postmistress and postmaster contractors in post offices across Ireland," it said.
It said An Post and Fortis planned to build on the experience of many international postal operators, who have successfully entered financial services in recent years "to offer An Post's substantial customer base a highly competitive, modern range of financial services offerings".
The development of the financial services business was one of the key elements of the 2003 strategic recovery plan for An Post, which has suffered heavy losses in recent years. Financial services are seen as providing a buffer if the company loses the contract to deliver social welfare payments on behalf of the Government.
Consultants were appointed in early 2005 to identify a partner. It was reported that 28 institutions expressed interest. But only four financial providers made detailed proposals last autumn, with both GE Money and AIB believed to have been shortlisted. Bank of Ireland was not shortlisted. It already has a banking joint venture with the Post Office in the UK, which has not lived up to initial expectations.
Fortis operates in banking and insurance in the Benelux countries and also has a presence in niche markets such as shipping, commodities, export and project finance and fund administration. It also provides retail banking services in France, Poland and Turkey. It is a leading player in the bancassurance markets in Spain and Portugal.
