Bank of Ireland unveiled plans to close over 100 branches across Ireland, marking a major shrinkage of its network and another sign of the troubles facing the Irish banking industry.
It comes as Bank of Ireland disclosed an underlying loss of €374m for 2020 that reflects the large losses it made on impaired loans during the Covid financial crisis, although the lender said it had returned to profitability in the second half of the year.
Bank of Ireland has one of the largest branch networks across Ireland and the planned closures represent a major shrinkage of the 257 branches it has in the Republic and the 28 it has in the North.
It said it will cut 88 branches and keep 169 branches open in the Republic and close 15 branches and keep 13 open in the North.
Banks across Europe have accelerated plans to close branches during the pandemic but the scale of Bank of Ireland’s plans is guaranteed to lead to a push back from politicians and consumer advocates.
However, Bank of Ireland said under a new deal it will offer its services through 900 outlets of An Post in the Republic.
The closures also mark a new phase in the major contraction of the Irish banking industry after Ulster Bank over a week ago said it will close all its 88 branches and sell up its €20bn of mortgage and business loans.
Bank of Ireland chief executive Francesca McDonagh said that the take-up in technology had reduced footfall at branches over a number of years.
“When Covid-19 hit, we radically changed how we operate so that we could provide the services our customers needed, including payment breaks for mortgages and business loans,” Ms McDonagh said.
“Technology is evolving, and customers are using branches less, year on year on year. Covid-19 has accelerated this changing behaviour, and we’ve seen a seismic shift towards digital banking over the past 12 months,” she said.
Speaking to Newstalk, Ms McDonagh said customers had voted with their feet and that branches were just not getting the footfall that they did in the past.
She said in three days the bank's mobile app saw more business than the branches that are due to close would see in a year.
Ms McDonagh said that the 200 staff in the branches due to close will have a range of options, they can move to a nearby branch or another section of the bank. Voluntary redundancy will be available, there will be no compulsory redundancy, she said.
Later on RTÉ radio’s Morning Ireland, Ms McDonagh pointed out that three out of four customers in the branches that are due to close, had not set foot in the branch in the past year.
An Post will provide "a compelling alternative" for those who still want a physical transaction, she said.
“We're very mindful of the impact on communities, we are ensuring that no town will be left without banking facilities.
“Three out of four customers had not set foot in a branch in the last year,” she said.
Only nine of the locations where branches are closing also have an Ulster Bank branch, which has not announced any branch closures, she said.
Two of the Bank of Ireland branches to close are in colleges, four in Dublin. All branches have a post office within 500m on average.
On the outlook, the bank said that the crisis continues to weigh on its operations, predicting income this year will likely “be broadly in line with 2020 reflecting lower net interest income, higher business income supported by our wealth and Insurance business and a lower charge for valuation items”.
Despite elevated levels of impairment charges, the bank said its capital ratio stood at 14.9% at the end of the year.
The head of the Financial Services Union, John O'Connell, said it will launch a campaign to push back against the branch closures and called on Finance Minister Paschal Donohoe "to immediately pause" the plans.
Bank of Ireland is 14%-owned by the Government.
The closure plans were "shameful and an act of betrayal to loyal staff and customers”, general secretary O'Connell said.
"How can BoI think it is appropriate to make this announcement when the country is in the middle of a pandemic. It is a shameful act which needs to be reversed," he said.
Chief executive of business group Isme, Neil McDonnell, said that the Irish baking industry was "being hollowed out" to the benefit of the big two lenders, AIB and Bank of Ireland.
Despite the drift to online banking services, Mr McDonnell said that the Bank of Ireland plans were "a major blow".
And citing the plans of the third-largest lender Ulster Bank to close down completely in the Republic, Mr McDonnell said that there was an increasing duopoly in banking "and part of that duopoly was closing branches" with the latest plans by Bank of Ireland.
The Labour Party’s finance spokesperson Ged Nash said the Bank of Ireland was hiding behind the Covid crisis to accelerate branch closures.
"There is no doubt that Bank of Ireland is exploiting the Covid-19 crisis to drive down its costs," Mr Nash said.
He said the closures would "have an even more severe and direct impact on the fabric of communities across the country than Ulster Bank’s recent announcement, given their extensive reach".
Customers will again be the big losers despite the tie-up with An Post, said Dermott Jewell, policy adviser at the Consumers Association of Ireland, adding that the scale of the closures was a significant move in Irish banking.
“Customers did not sign up with and pay their fees to Bank of Ireland to transact their business with a premises down the road,” Mr Jewell said, referring to An Post.
He said that the announcement was being promoted as an inevitable and somehow positive development from the advance of technology but he wondered about the level of engagement Bank of Ireland had had with its customers before it took its decisions to close over 100 branches across Ireland.
Mr Jewell also signalled out the plans by Bank of Ireland and three other banks – AIB, Permanent TSB, and KBC – to develop a common payments app between them, as it announced branch closures.