AIB is expanding its UK operation and plans to open 20 new branches aimed at small business. The expansion will cost in the region of £50 million (EUR70 million) and will create some 200 new jobs.
AIB currently has a 2 per cent share of the business banking market in the UK and believes there is the scope for considerable growth. Overall, the bank's UK operation accounts for around 25 per cent of group profits.
Mr Bob Baldock, AIB's head of corporate banking in the UK, said the company enjoyed close relations with its clients and said that it had identified a niche market in the small business sector.
He said: "Our profits have been doubling in the last three years and our work with various clients has identified a number of different niches that we would like to explore." He added that AIB had always been strong in both the personal and business banking and argued the recent growth warranted the "need to open more local branches." According to Mr Baldock, five of the branches have already opened in the last six to nine months with five more set to open within the next year. A further 10 will be rolled out over two to three years.
Mr Aidan McKeon, chief executive of AIB's UK operations, said the bank already had a strong customer base in areas such as the hotel and leisure sector.
AIB's expansion comes after a number of rival banks have been scaling down their ambitions for small business banking following a ruling by the Competition Commission last year. It concluded that Britain's 3.5 million small businesses had been overcharged £725 million sterling a year because the big four high street banks operated a monopoly.
As a result, the government ordered banks to pay interest on small business accounts or offer free money transmission. However, this decision meant that banks such as Alliance & Leicester and Abbey National - which had been offering such services - lost their advantage. AIB's decision to expand its UK operations through organic growth follows the groups withdrawal from the US market.
Last month, AIB completed the sale of its Baltimore-based subsidiary, Allfirst, to M&T bank. AIB took a 22.5 per cent stake in M&T as part of the deal. - (Additional reporting Financial Times Service)
