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Bank of Ireland to wind down €2bn British corporate lending business

Forty jobs at risk in bank’s latest retrenchment in increasingly profitable UK market

Bank of Ireland has decided to wind down its €2 billion-plus British corporate and commercial loan book, as it continues to restructure its offering in that market. Photograph: Cyril Byrne

Joe Brennan
Wed May 15 2024 - 05:00

Bank of Ireland has decided to wind down its €2 billion-plus British corporate and commercial loan book, affecting 40 jobs, as it continues to restructure its offering in that market.

Staff were informed of the move to exit the business on Tuesday in an email from Gavin Kelly, chief executive of the group’s corporate and commercial banking division. A spokesman confirmed the contents of the email, which has been seen by The Irish Times.

The bank does not publicly disclose the size of its portfolio of corporate loans in Britain, provided both directly to companies and as parts of syndicates with other banks. However, it is believed to equate to close to 3 per cent of the group’s €81 billion total loan book.

The bank’s corporate lending business in Northern Ireland and its wider UK property and leverage acquisition finance activities are unaffected.

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“This decision is informed by a range of factors including, crucially, the ability to generate long-term sustainable returns,” said Mr Kelly in the email. “A phased wind-down of the existing book is proposed in line with its maturity profile, which could take up to 36 months to complete.”

Mr Kelly said the UK remains “an important part of the overall Bank of Ireland Group footprint” even after years of retrenchment from various retail segments of the market.

The group’s UK retail loan book contracted by 30 per cent over the past four years to close last December at £17.4 billion (€20.2 billion), as it reversed out of the mass mortgage market and, late last year, exited personal lending.

Bank of Ireland’s UK home loans focus in recent years has been on “bespoke” higher-return home loans offered through brokers. These include mortgages to the likes of professionals seeking larger-than-average loans and people looking to take equity out of their homes.

In December, the bank stopped providing mortgages and personal loans through the UK post office – dramatically narrowing the scope of a joint venture that was set up in 2003 – and ended its financial services joint venture with the AA there.

Bank of Ireland has since put its €1.1 billion of UK personal loans book into wind-down.

Still, the UK division’s underlying pretax profit has increased by 57 per cent between 2019 and last year. The first quarter of this year also saw net lending return to growth in the UK, rising by the equivalent of €100 million, driven by mortgage lending.

Bank of Ireland tapped a senior executive at Edinburgh-based Tesco Bank, Gail Goldie, in January to head the UK division.

“By being more purposeful and strategic about what we offer in the UK, we have transformed the performance of our businesses in recent years,” said Mr Kelly. “This latest step continues with this successful strategy, and the proposal will allow us to invest further in areas with greater potential for enhanced returns, both in Great Britain and across the group.”

Some 40 Bank of Ireland employees in London and Manchester are being affected by the decision to quit corporate lending in Britain. They are being offered options including voluntary redundancy or potential redeployment to roles in other parts of the group.

The bank has 1,900 employees across the UK, including in its Northern Ireland branch network.

Joe Brennan

Joe Brennan

Joe Brennan is Markets Correspondent of The Irish Times

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