Irish Life switches bank account to Ulster Bank
AIB has lost the lucrative Irish Life current banking account to Ulster Bank. Irish Life confirmed to The Irish Times yesterday that following a review of its banking practices it has placed its current account business with Ulster Bank.
The transfer of the business to Ulster Bank follows the appointment of Mr David Went as chief executive of Irish Life earlier this year and underlines the close relationships between Irish Life and Ulster Bank. Mr Went was a former chief executive of Ulster Bank and he brought Mr Brian McConnell from Ulster Investment Bank into Irish Life as chief operating officer.
Confirming the transfer of its banking business from AIB, an Irish Life spokesman said yesterday that "the decision to switch followed a review of our banking practices and discussions with Ulster Bank which gave us a very competitive tender for the business".
In a clear reference to the competition between Irish Life and AIB in the life assurance market, the Irish Life spokesman said: "Ulster is a bank with whom we have relationships and for whom we manufacture a number of life assurance products and we are delighted to have an opportunity to support those relationships."
Intensifying competition in the life assurance market and ensuring that it did not provide a competitor with any potential opportunities would have been an important factor in the decision to transfer the banking business.
Another move since Mr Went took over as chief executive of Irish Life reflects this strategic line - the decision to offer customers with maturing life policies special banking arrangement at TSB Bank and thus avoiding paying large lump sums into the accounts of Irish Life customers in AIB and Bank of Ireland.
AIB, which has held the Irish Life current bank account for a number of years, declined to comment yesterday. A spokesman said "we cannot comment on whether an individual was ever or is a customer of the bank".
It is understood that AIB has held the Irish Life account for a long number of years. It is a very large and active account. One banking source said it would be one of the largest Irish corporate accounts and would provide lucrative fee income for any bank operating the account because of the large volume of business involved.
Transactions on the account include all payments by Irish Life to policyholders and suppliers and payments of commissions as well as premium payments by policyholders to the company by direct debit or by cheque.
The move by Irish Life to Ulster Bank may increase the speculation which has been around the markets for some time that Irish Life is interested in bidding for, is about to bid for or has made an approach to National Westminster Bank for Ulster Bank. While Irish Life is clearly interested in expansion, group sources insist that no approach has been made to National Westminster Bank about a take-over or link-up with Ulster Bank. The intentions of National Westminster Bank with regard to any possible sale of Ulster Bank are a crucial consideration and some market sources feel that NatWest has no interest in disposing of the profitable Ulster operation.
Some sources also feel that the merger with Irish Permanent and the successful amalgamation of the businesses could rule out a major acquisition for at least six to twelve months. But other sources suggest that the merger is "unfinished business" and that Irish Life needs to acquire a bank of Ulster's scale to become a formidable bank-assurance operation. Whether Irish Life intends to make a move to acquire Ulster or not, the latest move by the life assurer has deepened the business relationship between the two financial institutions.