HBOS threw down the gauntlet to Ireland's biggest banks yesterday by unveiling plans to build the first branch network there for more than 120 years.
The UK's biggest mortgage lender will open three branches and a call centre this week, and a further branch every 10 days or so until it has 46 in Ireland. Online and telephone banking are on the way too.
It is the first serious challenge to the dominance of Allied Irish Banks and Bank of Ireland, which have a relationship with nine in 10 of all banking customers in the Republic.
HBOS, the UK's fifth-biggest bank, promises the same aggressive marketing tactics to sell simple, low-cost financial products in Ireland that it used to grab market share over here. The bank will launch an Irish savings account paying a market-leading 3.75 per cent interest rate. Mortgages and related insurance, credit cards and personal loans are also on offer.
James Crosby, HBOS's outgoing chief executive, is attracted to Ireland because of the country's surging economic strength and demographics. He said: "Projected economic growth in Ireland remains the envy of the developed world. It's clear that the Celtic tiger is still roaring. The big banks there are comfortable with the status quo and have not yet had to face competition from a focused, low-cost provider. You can expect aggressive comparative advertising just like in the UK."
The Irish typically save twice as much of their pay as the British. Unemployment is low, and the size of the working population is burgeoning. Retail banking margins - the difference between rates at which HBOS can borrow and lend money - is twice that in Britain.
Mark Duffy, who runs the bank's Irish operations, reckoned customers would desert competitors in droves for HBOS's longer opening hours. He said: "Local banks don't have a retail ethos."
HBOS's Irish foray will cost an initial €160m (£109m), which is being paid for with profits already made in the Republic - the bank has six regional business centres there. About 13 per cent of HBOS's profits come from its international operations.Reuse content