Halifax set to close after direct orders from UK treasury

Jon Ihle

Bank of Scotland Ireland (BOSI) is preparing to shut down Halifax, its retail arm, beginning in September following explicit instructions from the UK treasury to cease lending in Ireland and repatriate €20bn of its €35bn in Irish assets under the UK government asset protection scheme (GAPS).

The move is the culmination of an extensive strategic review, dubbed Project Primrose, begun by the bank after the UK government engineered the rescue of BOSI's Edinburgh-based parent bank, HBOS, last September by forcing it to merge with Lloyds TSB, which is now 43% state-owned.

The outcome of Project Primrose, which was discussed at a board meeting two weeks ago, and the orders coming from the UK have bitterly divided the executive committee which runs BOSI in Dublin, leading to the departure last week of head of retail banking Antoinette Dunne - considered a rising star and possible successor to chief executive Joe Higgins.

According to informed sources, two more executives are planning to depart "within weeks" over the changes. The discord became so serious last week that Lloyds dispatched UK executive Jo Dawson to Dublin on Thursday to help quell the unrest.

The bank is planning to formally announce the restructuring at the end of August as part of a larger strategic statement by Lloyds, sources said. After the changes, BOSI would comprise a "rump" bank made up of its business banking division and possibly the savings and investments side of the retail business. The property development lending business will all but disappear when the €20bn in assets transfers to the UK parent bank's balance sheet.

A BOSI spokesman said it was bank policy not to comment on strategy.

Halifax opened in January 2006 after BOSI acquired the 54-branch ESB shop network, immediately establishing it as a high street presence and so-called "challenger brand" to the established retail banks. Building on the work of BOSI's personal banking, Halifax tried to peel off existing customers from AIB and Bank of Ireland by offering innovative products such as tracker mortgages, interest-bearing current accounts and 0% interest credit cards.

BOSI lost €250m in 2008 after taking a €553m impairment on bad loans. Halifax has effectively withdrawn from all new lending this year, according to sources, through uncompetitive pricing on mortgages and other loans.

July 12, 2009

Comments

#1 Mike commented, on July 12, 2009 at 8:11 p.m.:

If that is the case why have they an add on tv every 10 minutes

#2 phil commented, on July 12, 2009 at 8:58 p.m.:

Its incredible!Who can-who do you trust?
Its like a scene from a sci-fi movie wwhen we all sleep soundly after in the serene knowledge that it was just a movie:but this stuff is for real!!"Is this the end of the world as we know it"?

#3 Paul commented, on July 13, 2009 at 9:22 a.m.:

They have the adds because they paid in advance for them, as bad as they are!
Keep Halifax/BOSI!!

#4 Ellen commented, on July 13, 2009 at 1:29 p.m.:

They will be missed . . . given any other economic era, they would have made banking very competitive in Ireland

#5 Rory commented, on July 13, 2009 at 1:44 p.m.:

I won't have to repay my mortgage so!!!

#6 Banker commented, on July 13, 2009 at 1:48 p.m.:

BULL..its not closing

#7 jim morris commented, on July 14, 2009 at 12:23 p.m.:

What happens to our savings accounts. Will they be affected???

#8 davek commented, on July 14, 2009 at 1:23 p.m.:

glad to see the back of them and their misrepresentations. constantly appearing to offer high interest rates on deposits yet in reality offering poor value if you read the small print. how they get away with advertising like that is beyond me. good riddance

#9 Greg Gabbett commented, on July 14, 2009 at 4:28 p.m.:

Delighted to hear they are going - nothing but nothing but lies, poor cust. service, misrepresentations - i could go on - Bye bye Halifax and good riddance....

#10 Pauric commented, on July 14, 2009 at 4:36 p.m.:

Sympathy goes out to the staff who seem to have been working hard to win business in a difficult environment, only to have been let down.

#11 Laura commented, on July 14, 2009 at 8:40 p.m.:

Compare like with like with Irish banks and you'll see they are giving us good deal after good deal.

Just speculation that they're closing. Nothing has been announced and we need to continue to support them..they brought huge competition & great rates to us and of course a friendly service.

#12 Elijah commented, on July 15, 2009 at 11:37 a.m.:

I've always found the staff to be pleasant, open and approachable - defintely more so than in other banks. I don't think Halifax is any more or less guilty of misrepresentation than any bank, the small print will always catch you out if you don't take the time to check through it. Regardless of the bank policy, it must be a horrible time for the staff reading about the speculation, I wouldn't like to be in their situation.

#13 Adele commented, on July 15, 2009 at 4:19 p.m.:

What happens to our mortgage if this happens?! Will it still be held by BOSI or will it be held by BOS in UK, or will we just not have to pay it? sadly I don't think option three would happen, but it would be nice to think.....

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