THE BOARD of Bank of Scotland (Ireland) will discuss options to downsize the company’s operations at a quarterly meeting on Friday, with significant changes to the bank’s Halifax retail business among the issues to be considered.
The bank is reviewing its operations as the company’s parent bank, Lloyds Banking Group, which is 43 per cent owned by the UK government, assesses its overseas businesses and considers ways of reducing overall loans.
A spokesman for the bank had no comment on the meeting.
The board, which is chaired by Maurice Pratt, former chief executive of drinks group CC, will assess the level of bad loans across the business and consider a range of options to examine the short-term sustainability of the business and how best to use the capital received from its parent company.
Lloyds injected €750 million into its Irish subsidiary late last year to help the bank absorb rising loan impairments and to assist the bank with new lending.
Bank of Scotland (Ireland) made a loss of €250 million in 2008 after writing off €553 million on bad loans mostly to developers – a near 17-fold increase on the previous year’s bad debts. The loss compared with a pretax profit of €272 million in 2007.
The Irish bank is thought to be coming under pressure from its UK parent bank to reduce lending as part of Lloyds’s overall strategy of “deleveraging” its business.
Halifax could be the focus of significant changes within the bank as demand for loans and mortgages has fallen dramatically in the Irish market and financial institutions curtail new lending.
The bank has aggressively rolled out its retail brand since 2005 when it acquired the ESB’s retail chain of shops. The bank rebranded its retail network to Halifax in late 2006 and has since grown the chain to 46 outlets.
Halifax launched a new advertising campaign this month featuring Irish actor Colm Meaney.
Among the board members who will attend Friday’s meeting are Joe Higgins, the newly-appointed chief executive who succeeded Mark Duffy earlier this year.
Richard McDonnell, the bank’s chief operating officer, will attend his last board meeting before leaving the bank next month.
Lloyds took a charge of €81 million after writing off the goodwill remaining from its acquisition of former State-owned lender ICC.
The UK bank was formed last year in the merger of Lloyds TSB and HBOS, the former owner of Bank of Scotland (Ireland), with an injection of £17 billion (€19.8 billion) by the British government.
Analysts had speculated at the time of the merger that the bank may offload its Irish business as it concentrates on its home market following the injection of UK government capital into the bank.
However, the Irish bank cited the €750 million injection from its UK parent as evidence that the subsidiary had the backing from the recently-merged UK bank.
Some 1,600 people are employed at the bank’s Irish subsidiary, which has a loan book of €32 billion.
