News poses more credit issues for SMEs

THE pending closure of Bank of Scotland’s entire Irish operations should not adversely affect the bank’s existing mortgage customers here, but could pose further credit challenges for the country’s small business community.

Bank of Scotland Ireland (BoSI) will formally cease offering banking products as of the end of this year. All existing business will be transferred to Bank of Scotland in Britain and will be regulated by the Financial Services Authority (FSA) there.

The bank — now owned by the Lloyds Banking Group — closed its retail banking arm, Halifax Ireland, earlier this year with the loss of 750 jobs. This left it with around 850 employees in its business banking arm, most of whom will now be transferred to a new managed services company, the business of which is expected to be taken over by a consortium of outgoing BoSI management figures.

While existing Irish-based term loans, mortgages and business loans will remain Bank of Scotland property, management of them will come under the aforementioned new entity. The bank stressed, yesterday, that all mortgages and other loans will be unaffected until their maturity dates.

BoSI is to begin writing to customers to explain the changes and how they will affect them. In the meantime, concerned customers can contact the bank directly on 1890-818181.

Meanwhile, given that, without Halifax, Bank of Scotland’s main focus in Ireland has been business banking, ISME — the small firms lobby group — has expressed concern.

“This announcement raises serious concerns on a number of fronts. Firstly, assurances need to be provided for existing customers’ current funding requirements. Secondly, it restricts all SME options in attempting to secure finance in an already shrinking banking market. Thirdly, reduced competition will result in increased bank interest and charges for already hard-pressed bank customers,” said ISME chief executive Mark Fielding.