Bank of Ireland to shed 350 jobs in UK merger

Bank of Ireland is to shed 350 jobs in the merger of two loss-making financial advice operations in Britain.

The merger between Chase de Vere and MX Financial Solutions (MXFS) will see the bank write off £95 million sterling (€140 million) as an exceptional charge, £80 million of which reflects impairment of goodwill.

Bank of Ireland has spent an estimated £195 million on expansion in the British financial advice market since acquiring Chase de Vere in 2000.

The merged business, which will be left with 450 staff, will be repositioned in the employee benefits market. Bank of Ireland chief executive Mr Mike Soden said the rationalisation decision reflected "the current depressed investment climate". He added that it was important for the bank to focus on its strongest financial advice asset.

In a separate development, Bank of Ireland said yesterday that it had continued its share buyback programme by purchasing 635,430 shares at €10.20 last Friday. It is believed that the bank was back in the market yesterday, buying a block of about two million shares at €10.

Bank of Ireland closed at €10.02 last night, down 18 cents in a generally weaker market. The stock has gained 4.4 per cent since the bank commenced its share buyback on February 12th.

Analysts have welcomed both the new buyback and the UK rationalisation, noting that while a £95 million write-down was not ideal, it was preferable to the retention of a drain on UK profits.

About one quarter of the €1.1 billion Bank of Ireland made in pre-tax profits last year was generated in the UK. The bank does not provide a performance breakdown across its UK operations.

Mr Soden said the UK business, which includes a branch network in Northern Ireland, remains "on target to deliver solid full-year results".

In a research note issued earlier this month, Merrion Stockbrokers analysts, Mr Seamus Murphy and Ms Elaine Brownlee, highlighted "a lingering uncertainty" over Bank of Ireland's long-term plans for its UK operations.

The bank suffered an embarrassing defeat last year when it failed in a bid to take over UK bank Abbey National. Analysts say the current share buyback programme is designed to convince the market that further UK acquisition attempts are unlikely by removing excess capital from Bank of Ireland's balance sheet.

Ms Brownlee described yesterday's move as "another little step" in Bank of Ireland's reorganisation of its UK affairs but said the market would be looking for more action in the near future.

"We need to see some radical moves on Bristol & West," Ms Brownlee said.

A spokesman for Bank of Ireland declined to comment on the prospects for the Bristol & West subsidiary yesterday, save to say that "further change" was likely when new UK chief executive Mr Roy Keenan takes up his role at the start of next month.

The spokesman said the bank did not intend to exit the financial advice market altogether but had decided to take "determined action" in order to make Chase de Vere and MXFS viable.

Bank of Ireland has not yet established the exact location of the job cuts in Britain but it is thought probable that larger centres in Bristol, Bath and London will bear the brunt of the rationalisation.

The number of staff involved in web-based operation, Moneyextra, is also expected to be cut back substantially. Bank of Ireland employs 5,369 people in the UK.

Bank of Ireland has become the first Irish lender to offer mortgages at an interest rate of less than 3 per cent.

The bank has cut its one-year fixed mortgage rate for new customers from 3.35 to 2.99 per cent.