Bank of Ireland has announced a 10-year joint venture with the UK Post Office that will allow it to sell its personal loans, mortgages, savings accounts and credit cards through its 16,900 branches.
Bank of Ireland has agreed to invest £125 million sterling (€176 million) and will sell its products at UK post offices, and through its telesales network and website from 2004.
Bank of Ireland chief executive Mr Mike Soden said the deal, which gives it access to one of Europe's largest retail networks, was the way forward for the bank.
"It's an excellent opportunity for the bank to reach the UK. It's the beginning of a new chapter for Bank of Ireland in the UK market."
Post Office UK is part of the Royal Mail Group and serves 29 million people. Some 42 million people visit its branches every week and it has estimated that 27p in every £1 in circulation in the British economy passes through the Post Office.
Bank of Ireland already has a joint venture with the group, supplying foreign exchange at its branches under the First Rate brand. It won this contract following a competitive tender with up to three other financial institutions also pitching for the business.
Post Office chief executive Mr David Mills said Bank of Ireland was selected because of its ability to deliver products that would appeal to its customers and also because of its existing successful relationship.
"Our new range of products will have great appeal and I expect Post Office Ltd to become a major provider of personal finance services," he said yesterday.
The bank's First Rate travel service generated pre-tax profits of £35 million last year.
Mr Soden said the bank's growth potential through this link-up was enormous.
"In terms of the risk and reward involved, the upside is phenomenal. It is a strategic breakthrough. There will be no cannibalisation of our existing customers and we will wind up with a distribution network in the UK that is bigger than any financial services company," according to Mr Soden.
NCB analyst Mr John Kelly said Bank of Ireland's further investment into an already competitive market was questionable but that it did provide it with a significant retail distribution network in that market.
Bank of Ireland generates 30 per cent of its profits from the UK, where it sells financial services products and operates the Bristol & West building society.
The joint venture will be owned equally by the Post Office and Bank of Ireland Group and has an initial term of 10 years. Each shareholder will be offered board representation on the other's board of directors, subject to the relevant corporate governance procedures.
