Bank of Scotland (Ireland) is to shut down, it confirmed today.
It is understood 830 staff are still employed by BoSI, and although many will be 'directly impacted', the bank hopes to "minimise this impact with redeployment".
It said its other business operations in the Republic, an insurance operation in Shannon, and the Halifax branch network and customer service centre in the North are unaffected.
BoSI has staff in its St Stephen’s Green head office in Dublin and in regional offices in Belfast, Cork, Galway, Limerick and Waterford.
The bank said it was committed to working with employees carefully and sensitively as the wind-down takes hold.
The bank, which traded as Halifax on the high street in the Republic, is one of the biggest casualties of the recession after laying off 750 workers earlier this year.
It is a division of UK finance giant Lloyds and management announced plans in February to close all its 44 Halifax branches after only four years trading.
In a statement, the Lloyds Banking Group said there was little opportunity for Bank of Scotland (Ireland) (BoSI) to enjoy scalable growth in the future and business would be transferred to Bank of Scotland.
The move will see the balance sheet and loan book effectively placed on bank books outside of Ireland.
"The transfer of the BoSI business, including all of the strategic management and decision making activities relating to BoSI, will allow Bank of Scotland plc to utilise its extensive operational and management capability (including general and credit management, oversight and control) within the UK in relation to the Irish portfolio," said a statement from the bank.
"It is proposed that Bank of Scotland plc would enter into an agreement with an independent service company which would perform various administrative functions relating to the BoSI banking business. Under this proposal the majority of BoSI employees would transfer via Transfer of Undertakings (Protection of Employment) Regulations (TUPE) to the service company.
"The Group’s other business operations in Ireland and Northern Ireland – including its Halifax branch network and customers service centre in Northern Ireland and its insurance operation in Shannon – are unaffected by this announcement."
The Central Bank and Financial Regulator said BoSI must ensure customers' rights are protected and they are treated honestly and fairly during the closure.
The watchdog said customers should be informed of how the changes will affect them from the end of September.
“The implications will vary depending on the type of account or product customers may hold and the Central Bank and Financial Regulator would recommend that customers read the details very carefully,” it said.
The Unite trade union said staff were in shock at the announcement.
The company will make 36 compulsory redundancies and hopes that hundreds of workers will be retained for at least eight years as its loan book expires.
Brian Gallagher, Unite regional organiser, said job security has been seriously compromised by long term winding down of the Irish operation.
“There was so much hope when BoSI was established,” he said.
“So many promises that persuaded people to come on board and lay the foundation for a long career.”
“Those promises now lie like dust and the future for 800 staff is clouded by uncertainty.”
Unite claimed Lloyds was looking at the future of BoSI as a balance sheet exercise but warned the impact on workers was devastating.
“The bank, one of the largest financial institutions in Europe, has moral, legal, personal and financial obligations towards its loyal staff in Ireland,” Mr Gallagher said.
“The implications of today’s announcement for our members and their careers are massive, and Unite will consult widely with staff in the coming days before we go into discussion with management.”
BoSI has a loan book of about €30bn and 150,000 customer accounts.
The average life of a loan in BoSI is eight to 10 years, with some bigger borrowings running for 30 years.
According to the most up-to-date figures from the bank, it had €14.2bn of impaired loans at the end of June this year. It had written off €1.8bn of loans.
The bank plans to return deposits to customers as the wind-down takes full effect towards the end of the year.