The Taoiseach has moved to reassure Halifax customers following the bank’s decision to close its branch network as the main union representing staff at the bank vowed to fight the planned closure.
Brian Cowen said today he had been given assurances by Bank of Scotland (Ireland) that mortgage and account holders would not be affected by the bank’s decision to close its Irish retail arm.
The bank, which is owned by the UK bank Lloyds, is to close its 44 Halifax branches following a review of its operations that concluded Halifax was too small to survive in the Irish market as a result of the financial crisis and the recession.
The move will see the bank cut 750 job - 400 from 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.
The trade union Unite has vowed to fight the bank’s plan, saying it will consider industrial action to protect the 750 staff facing redundancy.
Unite regional officer Brian Gallagher said the bank had a viable future in the Irish retail market and “it’s experience in lending to the SME [small and medium enterprises] sector is second to none".
"We have been arguing for the last year that they should be included in a 'third banking force'," he told RTÉ's Morning Ireland programme.
He warned the union would use all the resources at its disposal to fight the bank’s plan. "We won’t rule out any form of action to protect these jobs,” he said.
Mr Gallagher said his union would also be looking for the support of the 850 staff the bank intends to keep in its business banking division here. The union is to begin a series of meetings today to consult workers on a course of action.
The closure of the branch network comes just four years after the Halifax chain entered the Irish market.
Mr Cowen told the Dáil today he regretted the decision to cut the 750 jobs but insisted the bank will maintain a presence in Ireland.
“I have been assured that all customers of Bank of Scotland (Ireland) will be looked after and will not be disadvantaged by the changes,” Mr Cowen said.
“Bank of Scotland (Ireland) will continue to have a presence in Ireland, obviously with 750 of the 1,600 jobs presently gainfully employed there no longer part of the operation after July.”
But Fine Gael leader Enda Kenny warned the withdrawal will reduce competition and asked the Taoiseach not to allow the big two lenders, AIB and Bank of Ireland, to dominate the market.
“If Bank of Scotland leave, they take with them competition and choice,” Mr Kenny said. “Taoiseach, we can’t have a return to the old days of the cosy cartel that operated between Bank of Ireland and AIB.”
Serious concerns are growing among the banking community and finance experts that the massive cutbacks could be repeated among other lenders.
The Taoiseach came under pressure in the Dáil to reveal when the Government first realised that the bank intended laying off staff and shutting its retail branches.
Mr Cowen said management notified civil servants of the massive job losses yesterday, prompting Labour leader Eamon Gilmore to ask if the Government had been "sleeping on the job".
“In a year when banks and banks and banks are the centre of the political agenda, no minister was talking to this bank, no department was talking to this bank about their intentions,” Mr Gilmore said.
“Was the Government asleep when this bank was considering withdrawing from retail activity and closing its branch measures?”
Yesterday the bank confirmed some 40,000 to 45,000 customers can retain their mortgages with the bank but must move to a new lender if they seek to remortgage or top up their loans.
“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.
“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.
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.
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 that 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.
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.