An Post and Belgian bank Fortis yesterday signed an agreement formalising the creation of a financial services joint venture in Ireland. The two groups will invest a combined €112 million in the project on a equal basis.

The Government last month gave its backing to the venture, which will see the State using its 1,400-strong post office network to enter the mortgage and personal credit market. The venture will offer a range of services to consumers, including mortgages, insurance and credit cards, starting in the first quarter of next year.

The venture, which will incorporate An Post's financial services operations, One Direct and Post Point, still needs approval from the Irish Financial Services Regulatory Authority. Once in operation, it will employ 250 people, rising to 500 over the next five years. Workers will transfer from An Post to the new business, but keep the same pay and conditions. Brussels-based Fortis, which is listed on the Euronext in Amsterdam, is mainly engaged in banking and insurance. It offers personal, business and institutional customers a range of products and services through its own outlets and broker networks. The new venture will give the company, which already has a presence in 50 countries, a foothold in the Irish market.

Speaking on a conference call to mark the formalisation of the agreement yesterday, Thierry Schuman, Fortis's general manager of retail banking, said that Fortis intends to become a major player in the Irish market. He also said the group was keen to become involved in other markets. Following significant losses in 2003, An Post cut more than 1,000 jobs in a rescue plan designed to return it to profitability. It is hoped this venture will help boost income and exposure for the State-owned group. - (Additional reporting Reuters)