ESB deal paves way for cheaper banking

David Clerkin

The E120 million deal will see the bank take over 54 ShopElectric stores, which it will reopen under the Bank of Scotland brand from November. More than 400 staff will be offered redundancy packages as well as new jobs with the bank.

Bank of Scotland (Ireland) chief executive Mark Duffy said the takeover was “fantastic” for the bank, the ESB and the staff involved, but that customers would be the biggest winners. The bank said the network would allow it offer: * cheaper and more customer-friendly current accounts, loans and savings.

* six new products over the next year, starting next month.

* Mr Duffy said the products “will put a significant saving in customers’ pockets.”

* Bank of Scotland shook up the Irish mortgage market in 1999 with a phone-based operation that forced other lenders to slash rates by 1.5%, saving borrowers E500 million each year in interest payments.

The company also offers credit cards in Britain that undercut competitors by up to 5%. Having its own branch network here will make it much easier to sell products to the mass market and shake up the existing retail banking scene.

Half of the new branches will be open by this time next year.

Two ESB stores, in Dublin’s Fleet Street and Cork’s Academy Street, will not be part of the deal. But Mr Duffy said the bank would address these gaps by opening branches from scratch. The ESB has retained both premises for strategic reasons.

ESB chief executive Padraig McManus said the retail business was suffering from large-format competitors such as Power City and Dixons and was no longer profitable.

ESB customers will still be able to make repayments on goods bought through the ESB using the Bank of Scotland network. The ShopElectric brand will gradually disappear during the second half of the year, with all shops eventually closed by Christmas.

Consumers Association of Ireland spokesman Eddie Hobbs welcomed the bank’s move, saying it was “terrific” for consumers.

ESB Officers Association (ESBOA) general secretary Tony Dunne, which opposes the sale of any part of the company, said workers had been completely taken by surprise.

“I think that this is actually going to be rather more complex than it has been portrayed,” he said.