Nationwide set to gain a foothold in the eurozone with expansion into Ireland

Click to follow

Nationwide is planning to expand into the Irish Republic next year, giving the UK's largest building society access to European funds to help combat the effects of the credit crunch.

The mutual has already approached the Financial Services Authority and the Irish Financial Services Regulatory Authority over the move and expects to begin operating early next year.

A spokesman described the decision as a "prudent strategic move ... to further diversify its geographical operations and funding opportunities." The move will give Nationwide a foothold in the eurozone, which would give it access to some of the European Central Bank's funding for fin-ancial institutions to help ease the effects of the credit crunch.

The building society has more than 800 branches, controls half of all mortgage lending business and is the second largest savings provider in the UK.

However, Nationwide's Republic of Ireland customers will not enjoy the same range of products as their UK counterparts. Customers in the Republic will have access to just two products – an instant access savings account and a fixed-rate bond, available by phone, post or online.

A spokesman for Nationwide said: "It is too early to say how the interest rates for these products will compare to the UK market, although they will be competitive for the Irish market."

There are no immediate plans to open branches in the Republic or offer customers more complex products like mortgages. This also means that Irish customers will not have access to the membership and voting rights that Nationwide's UK investors enjoy.

"This is a relatively small but growing market and there could be scope for a more wide-ranging product line in the future," the spokesman said.

Further details of the expansion will be made available after formal applications to the UK and Irish regulators.