Danske Bank delivers another blow to Irish banking sectorThursday 31 October 2013 13.41 By David Murphy
by Business Editor David Murphy
So another banking operation in Ireland has pulled the plug in the space of a week.
Danske Bank Ireland is closing its personal and business banking only days after ACC announced it was handing back its banking licence.
So what does this mean for Ireland?
There are going to be a combined 330 jobs lost, many of them will be compulsory redundancies.
It leaves a diminishing number of existing players with Ulster Bank, AIB, Bank of Ireland and Permanent TSB still open for retail business.
Ulster Bank’s future remains unclear until the UK Chancellor George Osborne announces his intentions in relation to the good and bad bank split which is proposed for its parent group RBS.
It is critically important in the current climate that Ulster Bank remains active because it forms a very significant part of the Irish economy.
But if Danske and ACC are pulling out it means conditions must continue to be tough for Ulster too.
Danske Bank’s financial results for Ireland said a lot. Despite years of restructuring it lost €33m in the first nine months of this year. Its decision showed it saw no light at the end of the tunnel for its own business.
The bank closed all its branches last year and replaced them with seven business centres which will now shut. Until now customers deposited money in An Post which provided a service for Danske Bank.
The bank has lost €3.3 billion in Ireland since 2008.
It said today it will keep its institutional and corporate business open which will employ a total of 200 staff. Troublesome loans to developers had been hived off to a separate vehicle.
But its personal banking continued to lose money because of the tracker loans which offered rates as low as 0.5% over the ECB rate.
The big losers of today’s decision will be clients of all banks as competition among financial institutions diminishes.
The mantra of the Central Bank and the Government is that they want to see the Irish-owned banks return to profitability.
So there is little incentive for the authorities to force banks to keep charges low even if competition is collapsing.