BANK OF Scotland (Ireland) is closing down the bank’s Halifax business and Irish branch network with the loss of 750 jobs, forcing more than 50,000 credit card and current account customers to move their business.
In another dramatic day of change for the Irish banking sector, the bank, which is owned by the part-nationalised UK bank Lloyds, said it will close its 44 Halifax branches, starting in May, as it withdraws from personal banking to focus on business banking.
Bank of Scotland (Ireland) (BoSI) said it was withdrawing from the Irish retail banking market after a review found that Halifax was too small to survive as a result of the financial crisis and the recession.
The closure of the branch network comes just four years after the Halifax chain was opened.
“There is no strategy for this business that will see it achieve break-even or profit in a realistic timeframe,” the bank said. “Unfortunately, Halifax is simply too small to succeed in this contracting market.”
The prospects for the “fledging” business were “fatally undermined” by the sharp economic downturn, said Joe Higgins, chief executive of BoSI.
Some 40,000 to 45,000 customers can retain their mortgages with the bank but they must move to a new lender if they seek to remortgage or top up their loans.
The bank, which has about 7 per cent of the Irish mortgage market, will shed almost half of its 1,600-strong workforce between June and July.
“We agonised over this for a very long time trying to find some other alternative,” said Mr Higgins. A large number of the job losses will be compulsory, he said.
The bank is cutting 400 jobs across the nationwide Halifax branch network, 220 jobs at a specialist finance unit in the head office on St Stephen’s Green in Dublin and 130 posts at its customer service centre in Dundalk.
“This isn’t the outcome that we looked for,” said Mr Higgins.
“I was involved in the launch of this business [Halifax]. We had very different views and ambitions for it – it is not an easy day for any of us that work in this bank.”
As an alternative to the closure of Halifax, BoSI had pressed its case to form part of the so-called “third force” in Irish banking that may emerge from the proposed marriage of the Irish Nationwide and EBS building societies.
Mr Higgins said that the bank had assessed several options, including the possibility of joining the third force, before deciding to close the bank’s Halifax business.
BoSI was one of the most aggressive and highly competitive lenders during the decade-long property boom, introducing tracker mortgages to the Irish market and driving down the cost of home loans and profit margins.
The bank’s decision means that it will run down some €10 billion in mostly residential mortgages out of a total loan book of €33 billion as BoSI withdraws from the personal banking market.
Mr Higgins rejected the suggestion that the 750 staff facing redundancy were being punished for the bank’s lending to the commercial property sector which was forcing the bank to take heavy writedowns on loans of €10 billion.
The closure of Halifax and the property loan losses were “two unrelated issues”, he said.
The trade union, Unite, which represents staff at the bank, strongly criticised the move, saying that staff would “fight tooth and nail to maintain their jobs”.
The union plans to press the Government to secure the 750 jobs by supporting the inclusion of BoSI in any “third force” mergers.
“There is a huge human cost to the announcement, and people are in a state of total shock,” said Bernard Daly, a representative of trade union Unite and an employee of 30 years at the bank.
BoSI said the decision to close the business was made by local management, not by Lloyds, which is 43 per cent owned by the UK government.