The ESB board has agreed to sell its retail outlets to Bank of Scotland (Ireland) for around €120m, in a deal which gives the bank access to a nationwide branch network.
The bank is planning to recruit the ESB's retail workforce to staff the 54 branches.
'This is a highly positive outcome for ESB and for staff working in the shops, giving them new careers in an expanding banking business, as well as being good news for the towns and communities involved,' said ESB chief executive Padraig McManus.
Under the deal, ESB will exit the retail business completely, but will retain the Fleet Street building in Dublin and Academy Street in Cork for what it calls strategic reasons.
BOSI will also acquire ESB's retail loan book, meaning that customers who are paying for electrical appliances can make their repayments to BOSI on exactly the same conditions that they previously held with ESB's subsidiary finance arm. ESB says negotiations between the two companies are expected to be completed by July this year.
BOSI said it would provide the ESB bill pay and cash payment facilities currently offered through these branches, which would give it access to over 185,000 existing customers. BOSI has more than 100,000 existing customer base through its home loan and motor businesses.
The bank said it would start opening the refurbished branches from November 2005 onwards. Before this, there will be a marketing campaign for its new retail products, the first of which will be launched next month.
'This deal is an excellent one for both parties. We have achieved our objective to provide a branch network to sell our new retail products, and the ESB is exiting the retail business while guaranteeing employment for its retail staff,' said chief executive Mark Duffy.
The bank plans to spend €30m on refitting the shops while it will also upgrade computer systems.
The bank first entered the Irish mortgage market five years ago. It is owned by British bank Halifax Bank of Scotland (HBOS).
ESB Retail's share of the market in Ireland has fallen from 24% in 1985 to a current level of 6%. ESB originally operated over 100 shops but has gradually scaled that figure down, and closed 27 outlets in 2003.
ESB said the retail arm was a 'low margin business competing in a very crowded market place', adding that a number of international retailers had also entered the Irish market in recent years.
The unions have been informed of the decision, and ESB management is briefing the 421 staff in the retail outlets. ESB expects to end retail operations on a phased basis between now and the end of the year.
But the ESBOA union said the move had come as a complete surprise, and it was seeking an urgent meeting with ESB management.
General secretary Tony Dunne said the union and the ESB had been involved in restructuring talks for the past couple of months.
