Bank of Scotland is stepping up its presence in the Irish market as its subsidiary company, Equity Bank, begins trading under the Scottish bank's brand. The bank, which is aggressively competing for new mortgage business in the Republic, says it has approved £950 million (€1.2 billion) in mortgages for Irish customers since it opened for business here last summer, although it refuses to disclose how much of those funds have been drawn down to date.
Bank of Scotland chief executive in Ireland Mr Mark Duffy said the bank would reveal details of how much mortgage business it had written since its arrival after a full year's trading.
Bank of Scotland was extremely pleased with the quality of business it had secured in the past nine months and was very optimistic that it could expand its share of the Irish mortgage market fairly quickly, he said yesterday.
Despite the name change at Equity Bank, however, the mortgage business will continue to be operated by telephone from Scotland.
Equity Bank, which is primarily focused on personal and corporate banking, reported a strong performance in the 12 months to the end of February.
The bank posted a 67 per cent increase in pre-tax profits in the year to the end of February to €7.69 million (£6.01 million). Lending volumes rose by 48 per cent to €724 million (£570 million) from €489 million, driven by continuing good demand for finance in the personal, real estate and construction industry. Deposits also increased, rising to €759 million (£597.76 million) from €518 million. Shareholders' funds at the bank more than doubled to €118 million (£92.93 million), while bad debts stood at €2.25 million for the year.
The bank achieved a net interest margin of 2.22 per cent on its core business.
The bank, which employs 250 people, also managed to reduce its overall cost base, mainly through investment in new technology, bringing its cost/income ratio down to 44.9 per cent from 48.6 per cent.
Based on the success of its foray into the Irish mortgage market, Bank of Scotland has moved to extend its brand to Equity Bank, according to Mr Duffy. It will now trade as Bank of Scotland and will increasingly introduce more products from its Scottish parent's operations.
Mr Duffy said the strength of the Bank of Scotland brand would bring great benefits to the bank and its customers. It would continue to be run by an independent board and it would be business as usual for customers.
The bulk of Equity Bank's business is in the Republic, with around 16 per cent of its profits generated in Northern Ireland.
Mr Duffy stressed that Bank of Scotland had "deep pockets" and was seeking to build up a substantial business in Ireland both through acquisitions and by expanding its existing business base. The bank had considered a number of potential acquisitions in the Irish banking sector, including the State-owned ICC Bank, but had not followed through with a bid.
Bank of Scotland's heightened presence in Ireland comes shortly after the acquisition by its arch rival, Royal Bank of Scotland, of NatWest Bank. The Republic's third-largest bank, Ulster Bank, is currently owned by Royal Bank of Scotland and is also expected to make its presence felt here in the coming months.
