WORKERS AT Bank of Scotland (Ireland) (BoSI) are seeking a large shareholding in the entity that is expected to manage the wind-down of its €33 billion loan book in the coming years.
This follows a decision by Lloyds Banking Group, the bank’s UK parent company, to withdraw from the Irish banking market altogether. It will hand back its Irish banking licence and close the business to deposits, current accounts and new lending by December 31st.
Its loan book will transfer to Bank of Scotland plc in Britain. In June, Lloyds shut its Halifax retail banking here with the loss of 750 jobs.
Workers were informed of the news yesterday morning. The bank said 36 staff would be made redundant as it closes its deposit taking, wealth management and treasury activities here.
Up to 850 are to be transferred to an “independent service company”, which will manage the wind-down on behalf of Bank of Scotland plc.
It is understood the bank’s management team here, led by chief executive Joe Higgins, has submitted a proposal to Lloyds that would see them set up an entity to manage the wind-down. Lloyds is expected to decide who will manage the wind-down in the next two weeks.
Brian Gallagher, a regional organiser with the trade union Unite, which represents the majority of BoSI staff, said his members wanted a 49.9 per cent share in this management-led company.
“There will be no other assets in this company other than the staff,” Mr Gallagher said.
“There is no doubt that the bank will pay a bonus for a quick resolution of these loans. That means that my members’ jobs will end sooner.
“If there are ‘super profits’ to be made out of this then my members want to have a share of that.”
Mr Gallagher said Unite would now appoint financial consultants to advise the union. Unite plans to meet management again next Thursday. “Our members are shell-shocked by the news,” he said. “They need a few days to think about this.”
Mr Higgins declined to comment on the possibility of a management-led entity managing the wind-down. “That’s a matter for Lloyds,” he said.
The bank has said there would be no compulsory redundancies in 2011 or 2012 for those staff who transfer to the new entity. It has also offered to pay a “retention bonus” of 50 per cent of salary to staff who remain until 2013 to help with the wind-down. The bonus will be paid in two equal tranches.
Lloyds decision to close here will affect 175,000 customers who have loans, deposits and savings with the Scottish bank. About 40,000 mortgage holders will be affected. This part of the loan book is valued at about €9 billion.
Some of the mortgages have repayment terms of up to 40 years.
Most of its other lending, including to the business sector, has average terms of seven to eight years.
The bank said customers will “continue to repay their loans until they reach maturity or when they are paid down in full”.
This decision marks a U-turn by Lloyds. Last year it announced its intention to close the Halifax network of branches here but restated its commitment to BoSI.
But a recent strategic review concluded that there was “little opportunity for scalable growth in the future” in the Republic.
Its operations in Northern Ireland are unaffected.
Minister for Finance Brian Lenihan said the withdrawal of the bank reflected the fact that there had been too much lending in the Celtic Tiger years.
“Thankfully, the [Irish] taxpayer does not have to pay the cost of their mistakes. Other governments in other countries will have to carry those losses,” he said.