Tusa, the only in-store bank in the Irish market, is to close on December 29th with the loss of 75 jobs - just two years after it was set up by TSB Bank and Superquinn. Discussions with staff on redundancy terms are to begin in the coming days.
Tusa operates in 14 Superquinn grocery stores throughout the Republic.
It was set up in October 1999 as a joint venture between TSB (51 per cent), which was subsequently taken over by Irish Life & Permanent (IL&P) in a €450.4 million (£354.5 million) deal completed last April, and Superquinn (49 per cent) with an initial investment of £5 million (€6.4 million).
Tusa aimed to undercut rivals' mortgage and credit-card loan rates, and to offer attractive savings rates using the advantage of its low-cost distribution network. It offered customers convenience by opening for 63 hours and seven days a week.
Despite offering one of the lowest mortgage rates in the market, Tusa only managed to get 500 mortgage customers in its two years and a total of just 10,000 customers.
Chief executive Mr Brian Mahony said the board decision to close was taken following "a detailed and comprehensive review of the strategic options for the business".
The review started in July. The level and type of business attracted did not justify continuing, he said. Tusa was based on a US supermarket/personal banking model that is hugely successful with busy shoppers. Despite the best efforts of staff, Tusa could not get enough customers, he explained.
"We wanted to provide a full personal banking service but people just cherry-picked products and did not move all their banking business.
"The concept was attractive, but the high levels of convenience and service may not have been enough. We suffered from customer inertia," he said.
Tusa recorded losses of about £3 million in its first year, followed by "around the same level" this year. Asked if the partners had refused to inject further capital, he said it would not have been a problem if the bank had sufficient customers.
An IL&P source said a hard-nosed business decision was taken but the writing was already on the wall because the company had not performed and losses were mounting.
The closure will have "no impact" on the terms and conditions of Tusa customers, Mr Mahony stated.
Tusa distributed products and services as an agent of IL&P, which will continue to administer these accounts, he said.
Asked how Tusa variable rate mortgage customers would fare when transferred to a parent with higher rates, he said: "Tusa's pricing policy will be maintained for some time after the closure".
He could not say how long this would continue.
IL&P, which is the process of merging Irish Permanent and TSB and looking for voluntary redundancies at the merged operation, described the closure as "regrettable".
