Woolworths collapse may benefit bank

THE collapse of British retailer Woolworths is expected to result in a windfall in penalty fees for Bank of Ireland.

The bank said its subsidiary, Burdale Financial, will recover in full the £385 million (€411m) it lent to Woolworths in February last year. However, it would not comment on reports that it will also collect millions of pounds in “penalty fees”.

Analysts said yesterday that the fees in question are likely to be those incurred for the early repayment of the loan.

Merrion analyst Aisling Vaughan said Burdale generally loans money against specific assets, which are usually non-property based.

She said that in the case of Woolworths, the money loaned could likely have been done so against stock in store, which was off-loaded before Christmas.

The charges are believed to be legitimate, but the revelation is likely to re-ignite a row about the role of the lenders in the demise of Woolworths and the wider responsibility of banks in a downturn.

At the time of Woolworths’ administration, advisers to the board reportedly expressed frustration about the lenders’ attitude.

“They are putting rebuilding their balance sheet before lending to a viable UK business with blue-chip clients,” an executive close to Woolworths’ board told The Daily Telegraph in November.

The final few Woolworth stores closed their doors yesterday, marking the exit of the 815-strong chain from the high street and leaving more than 30,000 unemployed and suppliers unpaid.

Also yesterday, Adams Childrenswear closed 111 of its 271 stores and cut 850 jobs after the clothing retailer was placed into administration last week.

The remaining 160 outlets will remain open, while administrator PricewaterhouseCoopers seeks a buyer for the company.

Adams has 31 outlets in Ireland but a spokesperson for the company said none of the shops in the Republic would be affected.

More in this section

News Wrap

A lunchtime summary of content highlights on the Irish Examiner website. Delivered at 1pm each day.

Sign up

Our Covid-free newsletter brings together some of the best bits from irishexaminer.com, as chosen by our editor, direct to your inbox every Monday.

Sign up