Bank of Ireland said it has taken a decision to close 103 branches in the Republic of Ireland and Northern Ireland, as the acceleration in digital banking has now reached a "tipping point".

The branches closing are predominately self-service locations that do not offer a counter service, Bank of Ireland said. The branches are due to close from the end of September.

As a result of the closures, the bank's branch network in the Republic of Ireland will be reduced by 88, leaving 169, while 15 Northern Ireland branches will close, leaving 13.

Bank of Ireland said it had agreed a new partnership with An Post, which will offer Bank of Ireland customers banking services at more than 900 locations across Ireland.

This will include over the counter cash and cheque lodgements, and cash withdrawals, with longer weekday opening hours than traditional bank branches, as well as Saturday opening. 

It said the closing Bank of Ireland branches all have a post office within, on average, less than 500 metres.

Bank of Ireland said there will be no compulsory redundancies as a result of today's decision to close branches nationwide.

Publishing its annual results for 2020, Bank of Ireland said customer preferences continue to evolve, and its significant transformation investment over recent years has improved its technology infrastructure, digital offering and customer engagement. 

"At the same time, we have seen a sustained decline in the use of our branches," it said.

"Our customers tell us that they expect visits to branches to reduce further as they move away from cash towards digital and contactless payments." 

The bank said it is adapting to these clear changes in behaviour as it works towards a long-term, sustainable and modern banking system. 

"Accordingly, following an extensive review of our network, we have taken the decision to close 103 branches in the Republic of Ireland and Northern Ireland," it said.

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"We will continue to operate 182 branches across the island of Ireland. The branches will be an integral part of the group's strategy of blending physical and digital services to meet our customers' evolving needs," it added.

It added that €12m will be invested in the remaining branch network by the end of 2022.

The CEO of Retail Banking at the bank said the Minister for Finance and the Department of Finance was informed of the bank's decision over the last few days.

Speaking on RTÉ's News at One, Gavin Kelly said there was no question of seeking approval or sanction from the Minister, who Mr Kelly said "would see this as a commercial decision for the bank and that decision was taken by the bank's management team".

Mr Kelly said the decision in relation to the branch closures was a difficult one to take, but was taken based on customer trends over the past ten years.

He said the bank had seen a 25% reduction in branch usage between 2017 and 2020, before the pandemic, and this has accelerated over the past year to a 50% reduction.

"This decision was taken in that context," Mr Kelly said.

He said lodging cheques, cash or withdrawals will be still available in 169 locations, as well as across the 900 post offices.

Mr Kelly said they have seen significant changes in the habits of their farming customers in recent years, with 90% of small business loans taking place over the phone and teams will visit customers around the country.

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Bank of Ireland posts underlying loss of €374m for 2020

Bank of Ireland today reported an underlying loss before tax €374m for the year to the end of December, reflecting the €1.1 billion it set aside to deal with potential bad loans arising from the Covid-19 pandemic. 

The group said it returned to profitability in the second half of the year. 

It also said that nine out of ten payment breaks that were offered on loans have now concluded with a return to pre-pandemic payment terms.

Its net interest income of €2.1 billion was 2% lower than 2019 due to lower new lending volumes and the ongoing impact of lower interest rates. 

The bank said its market share of new mortgage lending in Ireland averaged 25.5% in 2020 representing a 2% increase in market share in the year. 

Bank of Ireland said its outlook continues to be impacted by Covid-19, adding that its 2021 total income is expected to be broadly in line with 2020 reflecting lower net interest income, higher business income supported by its Wealth and Insurance business and a lower charge for valuation items.  

Costs will continue to reduce with 2021 costs to be less than €1.65 billion and a new 2023 cost target of €1.5 billion, it added.

Bank of Ireland CEO Francesca McDonagh

Bank of Ireland noted today that its mobile app is its most popular way to bank, with almost half a million customer logins every day and traffic up by a third in the past two years.

It said that seven in ten personal customer product applications are made digitally, and it expects this to grow to over eight in ten by the end of this year.

Meanwhile, the number of people visiting branches has sharply declined, and is now just over half of what it was in 2017. Footfall at the branches which are closing is down even more, by over 60% since 2017, the bank added.

Francesca McDonagh, Bank of Ireland's group chief executive, said that 2020 was an exceptionally challenging year for the bank.

The CEO said Bank of Ireland's focus was on supporting its customers through every stage of the Covid-19 crisis while continuing to deliver its strategy.

"When Covid-19 hit, we radically changed how we operate so that we could provide the services our customers needed, including payment breaks for mortgages and business loans. Our speed of response was made possible by the investments we have made in transforming our culture, systems and business model," Ms McDonagh said.

She also said the bank managed to grow its market share in Irish mortgages and SME lending, made good progress in the reshaping of its UK business, and further reduced costs.

"Today, we are setting out our plans to go further, with a new cost target for 2023," the CEO said.

"For many years, the trend to digital banking has been evident, with customers using branches less and less. Covid-19 has accelerated this changing behaviour, and we've seen a seismic shift towards digital banking over the past 12 months," Francesca McDonagh said.

"We’ve now reached a tipping point in customer preferences between online and offline banking. That’s why we’ve also announced changes to our branch network in Ireland and Northern Ireland today, while protecting access to local banking services though a new arrangement with An Post," she added.

Speaking on Morning Ireland, the Bank of Ireland CEO said the closure of branches around the country are "reasonably well spread" and will include Dublin locations.

Francesca McDonagh said the decision was made because customers are saying "loudly and clearly" that they want more digital and less branches and this is about investing where customers want to bank.

Ms McDonagh said the deal with An Post will enable all Bank of Ireland customers to carry out counter transactions in one of An Post outlets.

She said Bank of Ireland is "very mindful" of the impact on some local communities and no town or village where Bank of Ireland operates will be left without access to financial services or cash.

A hotline had been set up for customers, particularly older customers, the bank CEO said, but she added that there is a high take up of online banking among older customers and half of customers aged over 65 are registered online.

Ms McDonagh told Morning Ireland that she didn't believe the closure of 88 Bank of Ireland branches here, together with the phased withdrawal of Ulster Bank from the market in the coming years, would result in some towns being left without a bank branch.

"There are only nine locations that we are closing where there's an Ulster Bank branch. Of the nine, two are in colleges and we know that students bank very differently from branches. Four are in Dublin where there is very really good coverage with alternative branches. The remaining three are in locations where there is another bank operating so I don't think that is going to be an issue for customers," she said.

The CEO would not divulge if the bank was in talks with Ulster Bank about taking over any aspects of its operations or purchasing any loan books.

"I can't comment on any ongoing transactions. It's premature to also comment on what the final outcome may be."

Ms McDonagh confirmed that the bank was expanding its programme of negative interest rates and indicated that the policy would be applied to large deposits from high net worth individuals too.

"We have businesses that have balances of over €2.5 million that attract a negative rate. We're looking at that threshold and it may go down to €1 million."

"We're not looking at applying negative rates to your typical retail type customer, but when we're talking about deposits of €2.5 million plus, then we're looking at potentially expanding negative rates to the very large depositors. That would be the very high net worth individual space, but it really is a reality that it's the cost of holding onto very large deposits that we haven't passed on for many years but many banks across Europe are."

Bank of Ireland said its core Tier 1 capital ratio, a key measure of financial strength, stood at 13.4% at the end of December compared to 13.5% at the end of September.

The bank said it expected capital to remain broadly in line with those levels in 2021.

Analysts at Davy Stockbrokers said the results were "better across income, costs and, notably, impairments."

Shares in the bank rose in Dublin trade today.