LONDON: HBOS Plc. is planning to open 46 new branches in Ireland in the next 14 months, the bank announced Tuesday. The move is intended to shake up the Irish banking sector and offer stiff competition to two of the country's major banks, Bank of Ireland and Allied Irish Banks.
HBOS, Britain's fourth largest bank, said the rollout by Bank of Scotland (Ireland) will be the first major retail banking network in Ireland for over a century. It involves the branch network of Ireland's Electricity Supply Board, which HBOS acquired a year ago. The buyout and the cost of the networking will cost about 160 million euros and will be funded from cash generated from HBOS's existing businesses in Ireland.
While HBOS's main focus is Britain, which accounts for nearly 90 per cent of its earnings, Ireland is estimated to contribute 3 per cent of its profits this year. Expansion in Ireland is a major priority for the bank.
The bank said it will target 90 per cent of Irish customers, who at present have accounting relationships with one of the two Irish banks. It is immediately launching a new savings account, which offers a highly attractive interest rate of 3.75 per cent.
Surveys have found that Irish people tend to save twice as much of their pay as the British and unemployment in the country is low. Retail banking margins there are twice that in Britain.
Mark Duffy, chief executive of Bank of Scotland (Ireland), said there is lack of competition in Ireland and no single large bank had set shop there in the last 100 or so years.
He said the aim is to open a branch every 10 days for the next 14 months. The first three branches will come up on Wednesday in Limerick, Ballyfermot and Dun Laoghaire. The bank will also come up with new products and the bank branches will remain open for longer periods than the rivals. This will be an attraction for customers of the other two banks, he said.
Ireland has an estimated 39 per cent of its 4 million population in the key banking age range between 20 and 44 years.
Dutch Rabobank had opened an internet banking platform in Ireland in May last year.
HBOS chief executive James Crosby said Ireland has a fast-growing economy and a young population, two features that prompted the bank to expand to that country.
Crosby clarified that the bank will remain focused on its U.K. activities, saying, "The UK will remain our priority focus. We are not interested in going abroad for the sake of it." He said HBOS's international operations, which included the Bank of Western Australia, account for 12-13 per cent of group earnings.
Posted
on : Wed, 11 Jan 2006 20:05 GMT | Banking News
By : Salim Patel
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