Bank of Ireland will shortly begin to engage with a number of UK financial institutions as part of a process to sell its Bristol & West branch network and deposit book.
The bank has said it has received a number of expressions of interest. Amongst those said to be looking at buying these assets are Alliance & Leicester and Bradford & Bingley. Neither of these banks have a significant branch network in the southwest where Bristol & West's 97 branches are.
The sale process, which also includes the disposal of a €5 billion deposit book, is said to be at a very early stage.
Over the coming weeks, those institutions that have made expressions of interest will be given access to a data room as part of their preliminary examination of the business.
The sale process could take some time and sources suggest it is unlikely to be concluded in time for Bank of Ireland's full-year results in May.
Bank of Ireland bought the building society in 1997. It is part of the bank's UK financial services division. The decision to dispose of the branch network, which employs 1,000 staff, was taken following a comprehensive review of the business.
Bristol & West is a well known brand and has a good presence in the greater Bristol area. The bank has endeavoured to reduce its cost base and its failure to successfully cross-sell products to Bristol & West customers was a disappointment.
The sale will end uncertainty about the future of these operations and allow the bank to focus on the more profitable part of its UK portfolio. The sale will not enhance the bank's underlying profitability. The cost of replacing the branch deposits is also said to be relatively modest.
Bank of Ireland will retain its mortgage business, which is branded as Bristol & West, and is sold through intermediaries. It is the most profitable part of its UK business.
In its trading statement this week, Bank of Ireland signalled that the UK financial services division is performing slightly below expectations and will probably show a 2 per cent decline in profits from €132 million to €130 million.
The statement suggested that the fall in profits in the UK mortgage business, which is expected to be of the order of 20 per cent, continued in the second half.
The mortgage book is expected to be up by around 9 per cent at the end of March compared with a 12 per cent rise in the same period last year. Davy Stockbrokers is forecasting that the UK financial services division will bring in pretax profits of €259 million for 2004 and is forecasting profits of €264 million in 2005.
Earlier this week, Bank of Ireland announced a €120 million cost-reduction programme that will include the loss of 2,100 jobs. Around 80 per cent of the job cuts will be in Ireland. Thirteen branches will be closed and jobs associated with back-office functions will go.
On Tuesday, Bank of Ireland chief executive Brian Goggin, said the cost-cutting plan would enhance the group's competitiveness.
The scale of the job cuts has been strongly criticised by the Irish Bank Officials' Association.
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