Bank of Ireland is preparing to scale back its operations in Northern Ireland significantly, though the business is set to escape being shuttered as a result of a strategic review that is nearing completion, according to sources.
Group chief executive Francesca McDonagh signalled the review last August, saying that “all options” for the retail business in the North were on the table and that she would give an update at the lender’s full-year results, slated for March 1st.
Sources said the bank is planning to close a number of its 28 branches in Northern Ireland as part of a cost-cutting plan to reshape a business that the CEO has described as “subscale”, with a mid-single-digit percentage market share of the personal banking market in the region and a “high teens” slice of business banking. A final decision has not yet been made and may drift past the results date, according to sources.
“The strategic review is ongoing and, as previously stated, we will provide an update at full-year results,” said a spokesman for the bank, declining to comment further.
Ms McDonagh told The Irish Times in an interview last November that the “least likely option” is that the bank will commit more capital, “particularly in this environment”, to the Northern Ireland business.
‘Big decision’
“We want to be really thorough. It’s a big decision, so we’re being very, very considered,” she said at the time.
Bank of Ireland Northern Ireland has about 600 employees and 200,000 consumer and business customers. It fielded 150 applications from staff looking to take part in a group-wide voluntary redundancy programme late last year, according to a source. It is not known how many of these applications were accepted, with staff taking part having been given various exit dates extending through 2021.
The unit’s £2.5 billion (€2.8 billion) portfolio of consumer, mortgage and business loans was half the size of the £5 billion customers had stored in deposit and current accounts, which is seen as an unsustainably low ratio. The region of 1.88 million people is seen as “overbanked” and ripe for consolidation by some analysts.
Ulster Bank Northern Ireland, owned by London-listed NatWest Group, is the largest lender in the North, followed by Danske Bank Northern Ireland. NatWest is currently actively looking at winding down its business in the Republic of Ireland in a review that does not affect the Northern Ireland unit.
The Financial Services Union said before Christmas that Danske Bank’s Northern Ireland operation, which employs about 1,350 people, has committed to not cutting jobs for at least the next two years. That’s even though the wider Danish group said in October that it aimed to cut 7 per cent of its workforce – or up to 1,600 jobs – over the space of six to 12 months as part of a cost-cutting programme that runs to 2023.
AIB, which moved in 2019 to rebrand its First Trust Bank in Northern Ireland under the AIB name, reaffirmed its commitment to its franchise in that market in early December as it revealed that it was exiting small-business lending in Britain in a move that will save €35 million a year by 2023.
