Bank of Ireland UK venture valued at €2.2bn as report calls for break-up
Analysts in Dublin sceptical about union-commissioned report gaining traction
Analysts following Bank of Ireland have expressed scepticism about the prospects of a dissolution of the joint venture
A value of £2 billion (€2.2 billion) has been put on Bank of Ireland’s assets in its UK Post Office joint venture in a report calling for Theresa May’s government to break up the alliance.
The report, carried out by the Cass Business School in London for the Communication Workers Union (CWU), advocates that the UK government end the partnership and buying out Bank of Ireland’s assets in the venture, the Guardian reported on Thursday.
The report cites David Ward, general secretary of the CWU in the UK as saying that setting up an alternative state-owned Post Bank would offer “huge potential for growth” and provide banking services to small- to medium-sized enterprises (SMEs) .
Analysts following Bank of Ireland have expressed scepticism about the prospects of a dissolution of the joint venture, which had been mooted in UK political circles during the financial crisis, coming to pass. The partnership, established in 2004 is currently scheduled to run until 2023, and services about 2.4 million customers.
“We would view Bank of Ireland’s UK business as a key long-term strategic asset, particularly given the experience of incoming chief executive officer Francesca McDonagh, who may seek to expand it further,” Investec analyst Owen Callan said in a note to clients.
Ms McDonagh will join Bank of Ireland early next month from HSBC, succeeding Richie Boucher.
“The partnership with the Post Office is a very important element of their overall UK business, in terms of access to customer deposits without the need for a stand-alone bank network in the UK, and any suggestions that this may be under threat would obviously be a concern,” said Mr Callan.
“However we are sceptical that the current Conservative government would be supporters of a Post Bank plan, and so do not see this is a near term risk.”
Goodbody Stockbrokers analyst Eamonn Hughes also gave the prospect of the joint venture being dissolved, given that the report was commissioned by a union.
“Secondly, there is no guarantee that a state-owned bank will be successful lending to SMEs and financially excluded communities and wonder if such a strategy sits with the UK’s status as a capitalist economy,” Mr Hughes said.
A spokeswoman for Bank of Ireland said the lender “has a long established and successful financial services partnership with the Post Office, dating back over a number of years”, declining to comment specifically on the CWU report.