Halifax will face significant difficulties in disposing of its branch network. The market is swamped with bank branches and demand is slim, where it exists at all.
Traditionally, bookmakers bought up bank branches because they require premises with similar zoning, but demand from that sector is muted and localised. Elsewhere, the banning of upward rent reviews will put off most tenants from acquiring the leasehold interests without a substantial reverse premium – meaning the bank will pay the new tenant to take the premises off their hands – being paid.
Indeed what demand there is out there for the banks will mainly come from other businesses seeking short-term leases without any obligations. Landlords are likely to oppose the lease being passed to such retailers, said one retail property expert, who added that the only demand at present is from "cash for gold" operators seeking one or two premises on a maximum three-year basis.
The 44 bank branches are almost entirely leasehold interests and most have annual rents of more than €70,000 a year, according to industry sources. The branches are to be closed on a phased basis beginning in late May and concluding in June, but the bank will have to continue paying rent on the units unless somebody agrees to take the branches off its hands.
Most of the units, the source said, have between eight- and 10-year leases before there are break options, which would involve the payment of another year's rent before they could be handed back to the landlord.
AIB is expected to raise nearly €40m from the sale and leaseback of more than 20 bank branches in the coming weeks and it is generally accepted that branch closures are likely to happen eventually there and at Bank of Ireland.
As first revealed in the Sunday Tribune, NIB is seeking to close 25 branches here while ACC Bank is offloading excess branches. The defunct First Active is also selling off its entire branch network.
The closure of the bank branches and some other elements of the Halifax business will lead to 750 redundancies, most of them compulsory.