It has emerged that more than 500 jobs are at risk following an announcement that Postbank is to wind down, the Hughes & Hughes book chain has entered receivership and a major clothing retailer has gone into examinership.
The shareholders in Postbank have announced they will wind the bank down by the end of the year but said they hoped to secure “a significant” number of the 260 jobs here.
An Post and BGL BNP Paribas, shareholders in Postbank Ireland Limited, said they would continue their joint venture to the end of 2010 - but not beyond that date.
The bank will not accept new customers with effect from Monday, March 1st.
Chairman of the Postbank board, Thierry Schuman said a number of factors have led the shareholders to this decision. “They include the unprecedented circumstances in which the financial services sector finds itself, the highly competitive savings market within Ireland and the absence of a perspective of profitability in current market circumstances.”
Mr Schuman expressed his regret at the decision and his expectation that elements of Postbank “could still have a successful future within a new ownership structure”. Postbank management has been asked to prepare for “a professional and orderly wind-down of the bank by year end”, he said.
The Financial Regulator's office confirmed it had been informed of the shareholders’ decision.
Postbank chief executive Margaret Sweeney said customers would be the bank’s top priority over the months ahead. “Existing customers can conduct their affairs as usual, and customers can be assured that their savings are fully secure," she said.
She said elements of the business had “good potential for future development” and that their future would be a key objective in the period ahead.
Postbank employs 260 people, and it is expected that a significant proportion of these jobs can be secured as part of this process, a statement said. “Postbank will be meeting with staff representatives to brief them on developments and to devise plans over the period ahead.”
The bank said it would be writing to customers in the coming weeks and they do not need to take any action at this point. It would continue to be “business as usual” for existing Postbank, One Direct and Postpoint customers.
“Customer deposits continue to be covered by the Deposit Protection Scheme and the Government Guarantee Scheme.”
The Financial Regulator said today’s decision did not affect An Post savings accounts which will continue to operate as normal. Customers with any concerns or questions should contact Postbank on 1890 30 30 40 or at www.postbank.ie.
The Communications Workers' Union said it would press management at An Post to secure the future of the business. CWU general secretary Steve Fitzpatrick, said the turmoil in banking of the last two years had "demonstrated more clearly than ever the need for banking services through post office network".
Meanwhile, a receiver has been appointed to Hughes & Hughes Booksellers. The bookseller, which employs 225 people, blamed high rents, competition from internet retailers and the weakening of the euro against sterling for the fall in business.
The company said it had been operating in an environment of collapsing consumer demand due to the recession. It also said the fall in passenger numbers through Dublin and Cork airport had impacted badly on sales.
Elsewhere, it was revealed today 14 clothes shops are to shut and 80 jobs are under threat after a leading retail firm warned it was in financial trouble.
Bestseller (Retail) Ireland had an examiner appointed by the High Court today to help keep it in business. The holding company sells clothes and accessories under four brand names - Vero Moda, Jack & Jones, Only and Name It.
Bestseller (Retail) Ireland general manager
Lucy O’Mahoney said the business had been hit by two very tough years. “Along with the rest of the retail sector, we have experienced a very challenging trading environment in the last two years,” she said. “Our trading position has been further undermined by the steady increase in rents across all of our stores, which has seen property costs rise to unsustainable levels.
She said the company will negotiate with landlords during the examinership. But she added the process will put the business back on a solid platform.
Bestseller (Retail) Ireland is wholly owned by Danish firm Bestseller A/S and has been trading in Ireland since 1991. It employs 270 staff across 36 outlets in Ireland.
The 14 stores being closed are the worst performing - Vero Moda in Swords; Carlow; Waterford; Sligo; Blackpool and Douglas Co Cork; Charlestown, Athlone, Drogheda, Navan; Jack & Jones in Swords, Drogheda, Athlone; and Name It in Charlestown. Vero Moda in Athlone’s Golden Island shopping centre will stay open.
Asked about the Postbank closure, Mr Lenihan tonight said: "I am disappointed but not totally surprised . . . we can't have a limitless number of banks in Ireland provided an unlimited amount of credit.
"If we're going to have a sustainable banking system in the future, it has to be founded on the economic realities of the country. It can't focus on boosting spending to unsustainable levels; it has to focus on supporting small and medium enterprises and jobs and legitimate consumer purchases."
However, Fine Gael tonight claimed the Postbank move signalled the Minister for Finance's banking strategy is "defunct".
In a statement, Kieran O’Donnell, deputy finance spokesman, said: “Brian Lenihan’s bank strategy is unravelling before his eyes. Nothing in his banking strategy is working properly. . . . And this development adds further uncertainty about the Government’s options on the bank guarantee, which is due to expire in September."
“This move is an appalling reflection on Finance Minister Brian Lenihan and the Financial Regulator."
Responding to the Hughes & Hughes and Bestseller news, Retail Ireland director Torlach Denihan said: "Retail stores such as these are under severe pressure. The unwillingness to renegotiate and reduce rents shows the short-sightedness and stubbornness of landlords.
"The fact is that Ireland is a very expensive place to do business. Only when we bring down our costs to those of other European countries will we avoid this sort of regrettable situation where retailers are forced to close locations and reduce staffing levels," the head of the retail representative body said.