The pace of consolidation in the Irish financial services sector has moved up a gear with Irish Life & Permanent and Bank of Scotland making aggressive moves to win a bigger share of the market.
Both are ambitious and hungry to make more profits in the rapidly growing Irish economy. Despite yesterday's moves for TSB and ICC respectively, they still have an appetite for more.
It is almost two years to the day since Irish Life merged with Irish Permanent to create a substantial bank assurance group. It was not shy about wanting to become a third force in Irish banking, ranking behind AIB and Bank of Ireland. With the TSB it is on track to realise that goal and will become the third biggest financial services provider in the Republic. It is the biggest player in the mortgage market and the dominant force in the life assurance and pensions sector. TSB will help it make its presence felt in retail banking.
It can now offer customers current accounts and will have a broad distribution base to sell its expanding range of financial services.
Irish Life & Permanent's chief executive, Mr David Went, has stated it will continue to focus on growth in the Irish economy and has said that further acquisitions cannot be ruled out in the short term.
With exposure to the most rapidly growing segments of the sector, the enlarged group also becomes a more attractive takeover proposition itself and many analysts believe a bid for the organisation could materialise sooner rather than later.
Bank of Scotland is also a force to be reckoned with. It is in merger talks with Abbey National in Britain, talks which National Australia Bank is keen to join. Should the three institutions manage to reach agreement to consolidate, the knockon for the Irish market could be interesting.
Bank of Scotland made a bold entrance into the Irish mortgage market last year, injecting some welcome competition and better value for consumers. This aspect of its business will continue to operate from Edinburgh but it did raise awareness for the brand in the Republic.
The bank has long operated Equity Bank, which specialises in the small to medium-sized business market in Ireland, but only recently moved to rebrand it to trade as Bank of Scotland on the back of its positive contribution to reducing mortgage interest rates for consumers.
Yesterday it agreed to buy State-owned ICC Bank, which enjoys a good reputation and great loyalty from its customers. It also brings a well regarded venture capital business to the group.
Its plans for the Republic may depend on the outcome of the merger negotiations in Britain. But if National Australia Bank (NAB), which owns National Irish Bank (NIB) and Northern Bank, manages to crash the party, Bank of Scotland could find itself with a retail banking network in the Republic.
Such an outcome would be welcomed by NAB as it would rebrand the troubled NIB and offer a diversified distribution operation for Bank of Scotland products. Its arch rival, Royal Bank of Scotland, already has a retail banking and business banking operation here through Ulster Bank which it acquired from National Westminster last year. It is imposing new structures and wants to cut jobs and reduce pay scales to improve the efficiency of its Irish operations.
The growing presence of the two Scottish banks, which are bigger than AIB and Bank of Ireland, suggests a shift in the Irish sector is well under way with more changes almost certain in 2001.
