In another blow to Irish savers, Leeds Building Society has announced it is to close its Irish operation and has given its deposit customers two months to find another home for their savings.
The building society, which launched in Ireland in 2006, operated a branch on Dublin’s Pembroke Street that employed two full-time employees.
According to a spokeswoman, it had 427 savers in Ireland, with total deposits here of some €36 million. This means that the average deposit held with the building society by an Irish saver was about €84,000. The building society offered protection on deposits of up to £85,000 through the UK’s Financial Service Compensation Scheme, which indicates that Irish savers likely used the group to spread their deposit risk.
Leeds last year closed its deposit offering to new customers and more recently sold on its Irish mortgage book, which it had closed to new lending, back in 2009. According to the spokeswoman, the building society’s decision to sell its mortgage book led to its decision to cease trading in Ireland.
“As a building society, our core business is savings and mortgages – as we’ll no longer have any mortgages in Ireland, we reluctantly decided now is also a logical time to withdraw from the Irish savings market,” she said.
Leeds’ decision to depart the Irish market entirely is the latest in a long line of savings specialists exiting the market here.
Alternative home
Earlier this year, some 90,000 Irish savers had to find an alternative home for their deposits when Rabodirect closed its savings arm here, while last year Nationwide UK left, as it announced plans to focus on its core market in the UK, joining the likes Northern Rock, Danske Bank and Halifax/Bank of Scotland in exiting the Irish deposit market.
While the impact of Leeds’ departure may not be as significant as that of Rabodirect, given its scale here, its decision to leave means that competition has once again been impacted.
The building society had offered some of the keenest deposit rates and, according to the Competition and Consumer Protection Commission, there are now just seven institutions offering deposit options in Ireland, with the best rate available on an instant access lump sum deposit just 0.3 per cent with KBC.
A recent Irish Times survey showed that a saver with €10,000 on deposit earning 0 per cent interest would lose €90 over the coming year should inflation rise to 0.9 per cent, as per Central Bank of Ireland forecasts.
Customer letters
The building society wrote to customers in the middle of July informing them that it is to close its operations in Ireland, with all savings accounts due to close by September 28th. “This is not a decision we have taken lightly,” the building society said.
The financial institution has given customers until then to make “alternative arrangements” for their savings. Customers who don’t withdraw their funds before September 21st will be sent a cheque for the outstanding balance including any accrued interest on this date.
Figures from the building society’s most recent financial accounts for 2017 show that the group reported income of £1 million (€1.12 million) for the Republic in 2017, with a loss of £1.2 million.
