When the confirmation finally came that Bank of Scotland Ireland (BOSI) was closing down Halifax, its retail bank, after four unprofitable years taking on the incumbents of Irish banking, the news was delivered by union representatives in a quickly arranged press conference on the footpath outside BOSI's headquarters at St Stephen's Green in Dublin.
But the story had been at least seven months in the making and involved two other dawns that eventually proved false.
Last July, the Sunday Tribune reported that BOSI was preparing to shut down Halifax beginning in September following an extensive strategic review, called 'Project Primrose', which had been begun by the bank after the British government engineered the rescue of BOSI's Edinburgh-based parent, HBOS, by forcing it to merge with Lloyds TSB.
That rescue put BOSI under the command of two new masters: Lloyds, the bank that acquired HBOS, and the UK treasury, which ultimately underwrote the deal with a recapitalisation and an asset protection scheme, called GAPS.
BOSI executives understood early on that this arrangement could result in less support for the Irish operation, as the British taxpayer had essentially become the business's main benefactor after the government took a 43% stake in the merged entity.
Former chief executive Mark Duffy had started the review to assess the viability of the entire Irish business in light of the re-emergence of economic nationalism which accompanied the bank guarantee schemes in both the UK and Ireland. BOSI had at first been excluded from the Irish state guarantee, much to Duffy's chagrin, while it was initially unclear to what extent British taxpayers were willing to underwrite impaired businesses overseas as the crisis took hold.
The plan last summer, according to sources, was to shut the retail bank and hive off the most damaged assets from the property development and business banking book for inclusion in the UK's asset protection scheme, leaving a rump business bank to operate in Ireland, as the core of BOSI had always been the old ICC bank.
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.
Bank of Scotland Ireland lost €250m in 2008 after taking a €553m impairment on bad loans. Halifax effectively withdrew from all new lending last year, according to market sources, by uncompetitive pricing on mortgages and other loans.
The decision to gut the expanded BOSI not only spooked rank and file but led to a rift in the executive committee. High-level departures swiftly followed, including those of retail chief Antoinette Dunne – considered a future chief executive – head of banking Paul Cunningham, and chief operating officer Richard McDonnell, as the planned changes disrupted other high-level strategic plans. No sooner had the exodus begun, however, than new chief executive Joe Higgins told unions of a zero-hour "significant development" that could save the bank, or at the very least buy some time. Last week Higgins told the Sunday Tribune that the development was simply permission from the parent bank, Lloyds, to take more time to evaluate options for the Irish business.
According to a source close to the bank, Lloyds had conducted a review of its own, under pressure from the EU to shrink to comply with state aid rules. The source said Lloyds had hired British corporate finance advisers Hawkpoint to run the rule over the entire Irish operation – without local management's knowledge – with an eye towards divesting entirely from the market.
Amid all the confusion, it emerged that a large US private equity firm, believed to be Blackstone, baulked at a deal to buy the bank's assets at a significant discount. The $93bn private equity giant, which had reportedly been on the hunt for distressed debt in Ireland last year, had completed six weeks of due diligence on Bank of Scotland Ireland's €35bn loan book before pulling out at the last minute. The collapse left Higgins strategically abandoned by Lloyds and with no concrete plan for dealing with BOSI's troubled retail franchise.
According to market sources, BOSI continued to shop elements of the business to both local and international banks that might have an interest in parts of the business, especially its estimated €3bn in deposits. But when no deals were reached after months of searching, Higgins decided to pull the plug abruptly, finally leaving employees in no doubt of the bank's intentions.
Bank of Scotland Ireland (BOSI) chief executive Joe Higgins confirmed to the Sunday Tribune that there would be no resignations from its board over the total failure of the bank's retail strategy.
Despite the imminent closure of half of BOSI's business in the Republic and compulsory redundancy for 45% of its workforce, the board will remain intact.
Higgins told a press conference last Tuesday, however, that "management will be updated to reflect the new strategy", suggesting executives in charge of retail lines of business would be let go.
"We'll be downsizing the whole way down from the top," he told the Sunday Tribune.
Higgins set up the Halifax retail business under the supervision of his predecessor as chief executive, Mark Duffy, while chairman and ex-C&C chief Maurice Pratt has overseen the whole enterprise since 2006, when the Halifax brand opened for business.