Bank of Ireland and AIB drop IT merger

Bank of Ireland and AIB have abandoned a plan to merge their information technology operations.

The proposed joint venture - seen by some observers as presaging a full merger of the two companies - has been dropped because of a delay in securing clearance from the European Commission.

In a joint statement, the two banks said the decision had been taken because of an indication from the Commission that the project - which was to have been known as Sigma - would be subjected to a second stage of detailed investigation.

AIB and Bank of Ireland added that they had concluded that such an extended process would 'create great uncertainty and would be unduly costly', as well as having an adverse impact on customer service and being de-stabilising for staff.

Earlier this week, the bank workers’ trade union, the Irish Bank Officials’ Association, called on the banks to clarify their stance on the project, and underscored their concerns over its impact numbers - identifying the development as a pre-cursor to attempts to create a fully merged bank.

The association welcomed the formal scrapping of the idea.

Assistant General Secretary John O’Connell said the decision could spell the end of some senior management’s 'fantasy project' of a full merger.

The association had claimed that a merger would result in reduced competition, the closure of up to 100 branches countrywide and the loss of up to 5,000 jobs in the banking sector.

Mr O’Connell added that the IBOA has now been advised that the proposed merger of the IT facilities has been abandoned.

“Based on advice we have received, we are confident that the prospect of a full merger of both banks, which has been talked up by some members of senior management in the past few months, is no longer a reality.”

The union leader urged the establishment of a forum on the future of banking to allow for a full and inclusive debate on the future direction of banking in Ireland.