Bank of Scotland (Ireland), which is owned by the Lloyds Banking Group, is being wound down. In a statement, the bank said it would cease to operate as a licensed bank at the end of the year.
Staff were informed of the move at a meeting at its St Stephen's Green headquarters in Dublin this morning.
They were told that a strategic review found there was no opportunity for growth in the Irish market, and the Bank of Scotland (Ireland) business will be transferred to Bank of Scotland plc in the UK.
The move will result in 36 redundancies, and the bank says the vast majority of its staff, which numbers over 800, and handle local administrative activities, will be transferred to a new, managed services company. This in turn will be wound down over the coming number of years as the loan book shrinks.
It is understood that the existing senior management team at BOSI have tendered to run the independent managed services company that will runr BOSI's operations in Ireland into the future.
The team, which would be led by current chief executive, Joe Higgins, is thought to be preferred bidder to win the contract. It comprises six members of the current executive, including Mr Higgins. It is expected that Bank of Scotland plc will decide who wins the contract in the next couple of weeks.
The bank has 150,000 customers, and the life-span of its average loan is eight to ten years. BoS (Ireland) says this will need to be 'managed down in an orderly way'.
In a statement, the bank said its business, management and decision making activities relating to the bank will be transferred to Bank of Scotland plc in the UK
Local administrative activities will be carried out by a third party to which 'the majority' of the bank's staff will transfer, the bank said.
The bank has a workforce of over 800 here. It said the proposals will 'directly impact' a number of roles, but that it intends to minimise this impact with redeployment.
Bank of Scotland (Ireland) said that the union at the bank, Unite, has been informed of the move and it has started a period of consultation with the staff.
It said its other business operations - an insurance operation in Shannon, and the Halifax branch network and customer service centre in Northern Ireland - are unaffected.
Bank customers to see 'minimal' changes in accounts
It also said that customers would see 'minimal' change in how their existing accounts are managed. It said it intends that customers' loan facilities would transfer to Bank of Scotland plc, where customers would continue to repay their loans until they reach maturity of when they are paid down in full.
It also said it would work with depositors to ensure a smooth transition of their banking arrangements. Customers will be contacted in the coming weeks to advise them how these changes would affect them.
Bank of Scotland Ireland has operated here for over ten years. In that time it became heavily indebted because of its exposure to the property market.
The bank lent €13.3 billion for development and investment property in Ireland. €6 billion of this was for property development. In a presentation to analysts earlier this month its parent Lloyds said 90% of this is now impaired.
The bank, which started as a business bank and later got into retail banking, closed its Halifax brand earlier this year with the loss of 750 jobs and the closure of 44 branches.
Unite, the union at Bank of Scotland (Ireland), said that staff at the bank are in shock after today's announcement.
'The bank, one of the largest financial institutions in Europe, has moral, legal, personal and financial obligations towards its loyal staff in Ireland,' the union said in a statement.
'The implications of today's announcement for our members and their careers are massive, and Unite will consult widely with staff in the coming days before we go into discussion with management', it added.
Business groups have expressed concern about the BOSI announcement. Small business group ISME said it would lead to a further deterioration in competition for bank lending to businesses.
Chambers Ireland chief executive Ian Talbot said it was concerned for those businesses that were already with BOSI, who would now have to seek a relationship with the remaining banks, with whom they have no current track record.
The Financial Regulator said it has been informed of Bank of Scotland (Ireland's) decision. It said the bank must ensure that customers' rights are protected and treat their customers honestly and fairly during the process and ensure that all relevant regulatory requirements are complied with.
Customers with any concerns or questions about their accounts are advised to contact Bank of Scotland (Ireland) at 1890 818181 or at www.bankofscotland.ie
