BoI receives approval for offshore Internet bank

Bank of Ireland has received regulatory approval to begin an offshore Internet bank. Fsharp, based in the Isle of Man, represents the bank's most significant investment to date in electronic commerce. It will be formally opened for business later this week.

A spokeswoman for the bank said both the Isle of Man authorities and the Central Bank of Ireland had now granted regulatory approval for the project. Such licences are essential before trading of any sort can go ahead.

Fsharp will target Irish and British expatriates who want a high-tech, 24-hour banking service. It will provide a full range of deposit and fund management services, as well as credit and debit cards to allow easy access to funds.

Bank of Ireland said its target was to have 10,000 customers by the end of the first year, and 50,000 by the third year, by which time the bank hopes to be getting a return on its investment.

The cost of the operation has not been disclosed, but earlier this month Mr Tony O'Shea, head of the bank's treasury operation, said that it would be its most significant investment yet in the area. Fsharp is to be run separately from Bank of Ireland, but will use the bank's logo in its promotional material. It will employ around 45 people in the Isle of Man.

The bank will not offer services to residents of Britain or Ireland, but Bank of Ireland said the new operation could act as a prototype which would then be used elsewhere.

Research commissioned by the bank estimated that there are 1.7 million British and Irish expatriates with assets of £15,000 (€19,046) or more. According to Mr O'Shea, the bank reckons that this community is already familiar with the Internet - often using it to keep in touch with home - and many have a need for offshore banking services.

Those with existing offshore accounts were often dissatisfied with the services on offer, feeling that they are inflexible and make it difficult to carry out their banking activities from a distance. Mr O'Shea said the Internet offered a way to target the expatriate community "in a convenient and cost-effective way".

Customers will be able to conduct all their banking business online, although they will initially have to fill in and return a paper form to establish the account, as the bank needs to be sure of who is setting up the account. Testing has already started with pilot customers.

In time, the bank hopes to spread the marketing of the service to other expatriate communities.

Bank of Ireland said the name of the bank was developed after a lengthy search to find a name not already registered and is designed to give an impression of a leading-edge operation.

The bank will have an Internet service, backed up with a call centre open 24 hours a day. It will offer deposit facilities, fund management from Mercury Asset Management and Bank of Ireland Asset Management, a debit card from Standard Chartered and a credit card run by its own card services operations. KPMG will provide tax advice.

Mr O'Shea said Fsharp would be the first fully-interactive, transactional, offshore, Internet bank.