Bank of Scotland Ireland (BOSI) executives are being kept in the dark about the "significant development" which chief executive Joe Higgins told staff last week could alter the outcome of its strategic review and prevent the imminent closure of its Irish retail bank, Halifax, according to informed sources.
Only Higgins and executive committee chairman Maurice Pratt are privy to the new information, which emerged two weeks ago and led management to re-evaluate options for the Irish business, sources said.
Union representatives, who also do not know the nature of the development but welcomed the reprieve on behalf of the 1,700 Halifax staff, have been told by Higgins that it is in their members' best interest to wait for the development to materialise.
One source with detailed knowledge of the executive committee's deliberations said UK corporate finance advisers Hawkpoint had been retained by Lloyds TSB, BOSI's British parent bank, to run the rule over the entire Irish operation – without local management's knowledge – with an eye towards divesting entirely from the market.
Lloyds is under pressure from the EU to shrink to comply with state-aid rules and shedding BOSI – or at least a significant portion of its assets – could be one part of the plan to achieve that.
BOSI had already begun a strategic review, dubbed Project Primrose, late last year after the UK treasury forced HBOS, then BOSI's parent, to merge with Lloyds as part of a bank rescue plan. It emerged last month that Lloyds, under direction from the UK treasury to shrink its foreign commitments, was going to move €20bn in distressed Irish assets into the UK asset-protection scheme and shut down Halifax.
If Lloyds is seeking a buyer, this plan would now be moot as it would be up to any new owner to decide the fate of Halifax and the troubled assets.
It would also mean the departures of valued senior executives Antoinette Dunne, head of retail, and Richard McDonnell – who both are understood to have left over the looming Halifax closure – were needless.
A BOSI spokesman refused to comment when asked about Higgins' "significant development".
One market rumour named Nationwide UK Ireland as a prospective buyer. Nationwide is known to have scouted locations in Dublin and Cork for opening retail outlets with the goal of expanding from deposit taking into lending, including mortgages.
Nationwide did not respond to requests for comment.