10,000 Irish banking jobs could go, warns union

Lending Strategy March 2010

Some 10,000 jobs in the Irish banking sector may disappear, according to a prominent trade union.

The warning follows the decision of Bank of Scotland (Ireland) to close its Halifax retail branch network in Ireland and make 750 staff redundant.

The Irish Bank Officials’ Association has called on the government to organise a summit of stakeholders in the sector to discuss the crisis given the economic and social implications of what it calls a serious haemorrhaging of jobs.

IBOA secretary Larry Broderick says 6,000 jobs have already been lost, with more redundancies expected at big banks in the next few months.

The 44 Halifax outlets will be closed on a phased basis from May, four years after BoSI entered retail banking having acquired the premises in a £120m deal.

The bank, which has about 7% of the Irish mortgage market, has told borrowers they can maintain their home loans with it but must move to new lenders to remortgage or top up their loans. Credit card and current account customers must also move their business.

BoSI, which is owned by UK-based part-nationalised Lloyds Banking Group, says it is withdrawing from the Irish retail banking market because Halifax is too small to succeed in a contracting sector.

BoSI chief executive Joe Higgins says: “We have agonised over the closure decision for a long time but the business has been fatally undermined by the sharp downturn in the Irish economy.”

The bank entered the Irish market at the height of the country’s economic boom and ironically contributed significantly to the property bubble, the collapse of which has greatly exacerbated the present crisis. As the first outsider to compete in what was then a cosy cartel of Irish lenders it set about shaking up the market with aggressive offers.

It sold mortgages that were 1% cheaper than those of its Ireland-based rivals and introduced highly competitive tracker mortgages.

Margins were forced down as Irish financial institutions struggled to keep pace and the result was a property buying and lending splurge that eventually exploded with disastrous consequences for banks, borrowers and the country’s economy.

When BoSI’s withdrawal from the retail market was first rumoured there were reports that it might instead be considering joining the so-called third force in Irish banking that could emerge from a marriage between Educational Building Society and Irish Nationwide Building Society.

The IBOA is pressing the government to push that idea again as a way of averting branch closures and job losses.

But Higgins says that before it made its decision BoSI considered all options open to it in a seven-month review, including involvement in the third force.

He adds: “It’s a case of back to the future for us, as the bank reverts to business lending.”