Bank of Scotland to take on Irish banks

Halifax Bank of Scotland (HBOS) pledged to shake up the Irish banking market today after announcing plans to roll out a chain of high street branches.

The group’s Irish division – Bank of Scotland (Ireland) – will try to break the dominance of Bank of Ireland and Allied Irish Bank, which are thought to have a relationship with 91% of Irish customers.

It will attempt to trigger a battle among operators by launching a savings account rate of 3.75%, beating any existing rates available in the country, and offering longer opening hours than many other banks.

It said the move marked the first roll-out of a major new retail banking network in the country for more than a century.

HBOS, which is already Ireland’s second largest business bank, plans to open 46 branches over the next 14 months, starting tomorrow with two in Dublin and one in Limerick.

Its purchase of the branch network of the Electricity Supply Board (ESB) last year paved the way for the launch, giving it a chain of more than 50 stores.

The 3.75% savings account rate is based on the European Central Bank interest rate of 2.25% as well as a 1.5% “bonus” guaranteed until January 2008. The highest rate currently offered in Ireland is 3.25%.

The move will allow HBOS to compete for customers whose Government-backed savings schemes are due to mature later this year, resulting in large cash payments.

It will also give it access to the fastest-growing economy in the eurozone - the Irish economy grew by 4.7% a year over the past five years compared with 1.2% for the rest of the eurozone, according to the Organisation for Economic Co-operation and Development (OECD).

HBOS chief executive James Crosby said: “Ireland is one of Europe’s most outstanding economies. The economy is in very good shape and the outlook is good.

“Our strategy is about giving Irish banking customers value for money and our shareholders a better return.”

HBOS, which was created by the merger of Halifax and Bank of Scotland in 2001, has 22 million customers in its core UK market.

It has been concentrating on expanding in countries such as Ireland and Australia where banking systems are similar to the UK.

It has had a presence in Ireland for almost 20 years and employs around 1,200 staff through Dublin-based Bank of Scotland (Ireland) and 800 through Halifax Insurance Ireland.