Danske Bank Ireland is to close its business and personal banking operations with the loss of 150 jobs.
The group announced plans to discontinue the sale of products to new customers with immediate effect earlier today.
Danske is the second bank to announce plans to close this week after ACCBank said it was to hand back its banking licence next year with the loss of about 180 jobs.
The reduction in the number of lenders in the Irish market has led to concerns that consumers may lose out as competition in the sector diminishes.
Minister for Social Protection Joan Burton said the Central Bank and regulator need to ensure the State had a competitive banking sector and did not “charge excessive prices for their services”.
She added that credit unions can play a role in small-scale financing.
“There are about 150 people in Danske Bank affected by this announcement coming up to Christmas. It’s a difficult time for them and their families.
Danske said this morning it is to focus its business towards corporate and institutional clients. Existing personal customer products and services will be phased out during the first-half of 2014.
The announcement comes as Danske Bank Ireland recorded a loss before tax of €1.4 million for the first nine months of 2013.
Danske said existing business customers will still be supported by the bank while mortgages and personal loans will continue in line with existing terms and conditions.
"The decision regarding the personal and business banking divisions is necessary to stem the losses that continue to accrue in those units. Against the backdrop of the difficult economic and trading environment in Ireland, the bank has been unable to re-establish a sustainable retail banking business model," said Gerry Mallon, head of Danske Bank UK and Ireland.
Danske Bank said it would be in touch with customers in the coming weeks to inform them of necessary changes.
Danske Bank entered the Irish market in 2005, acquiring National Irish Bank in the Republic and Northern Bank in Northern Ireland. It currently employs about 350 staff in the Republic.
The bank said it would be commencing consultations with the banking union IBOA in relation to the impact of today’s announcement on staff.
IBOA general secretary Larry Broderick said the union was shocked by today’s announcement, which he claimed would have major consequences for many of the bank’s customers here.
“We have urged Danske Bank Group to reconsider this decision in the interests of its Irish customers as well as its staff.” he said.
ISME, the Irish Small and Medium Enterprises Association, expressed disappointment at the decision of Danske to withdraw from normal banking services. The association called on the Government to take steps to protect small businesses.
The Irish Farmers Association said the announcement further reduced the options open to farmers, SMEs and consumers looking for competitive banking facilities. It urged the Government to keep pressure on the remaining banks to ensure they stay competitive.
Danske Bank previously closed 27 branches and re-opened seven advisory centres, with the loss of 100 jobs.
The bank said there will be no changes for existing personal customers until the first half of next year.
Mortgages and personal loans will continue in line with existing terms and conditions. Customer deposits will be repaid in full and continue to be covered.
