Scottish bank to transfer its mortgage business to Dublin

Consumers have been promised increased competition in the banking market with Bank of Scotland Ireland preparing to expand its…

Consumers have been promised increased competition in the banking market with Bank of Scotland Ireland preparing to expand its mortgage business here and to move into offering credit cards and current accounts, Siobhán Creaton, Finance Correspondent.

The bank has announced the transfer of its mortgage business from Edinburgh to Dublin as part of its first move into retail banking here. In July it will start offering new mortgage products to first time buyers and investors and will introduce credit cards and savings products later this year. Next year it expects to offer current accounts.

The bank, which is part of the Halifax Bank of Scotland group, has established a substantial business in the corporate banking sector and fired the first salvo in the Irish mortgage price war in 1999 when it undercut Irish lenders. Since then, its parent has sold €2 billion worth of mortgages to Irish customers, and now claims to have won about a 4 per cent share of the Irish residential mortgage market.

Its expansion into providing banking services for personal customers comes at a time when the level of competition among Irish financial institutions is being closely scrutinised by the Competition Authority and the Irish Financial Services Regulatory Authority. The Joint Committee on Finance and the Public Service is also drawing up a report on the charges levied on credit cards and store cards.

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Economic research commissioned by Bank of Scotland Ireland suggested that consumers and small businesses could save up to €500 million a year as a result of increased competition among Irish financial institutions.

A comparison of interest rates charged across the euro zone, compiled by the European Central Bank, has shown that Irish consumers pay a higher rate of interest on overdrafts and earn lower returns on deposits than customers of other European financial institutions.

Ireland's mortgage market is among the most competitive in Europe.

Yesterday, Bank of Scotland Ireland's chief executive, Mr Mark Duffy, said it will provide genuine competition for the existing banks. "We have consistently said that we would expand into retail banking and offer a full range of banking products when the conditions were right," he said.

Bank of Scotland Ireland director, Mr Harry Slowey, who will head up the new retail division, said it aims to win up to 15 per cent of the Irish residential mortgage market within the next three years. It expects to write €800 million in new home loans in 2004, increasing its share of the market to 7 per cent.

The bank has no plans to establish a branch network and will be offering these services directly to customers by phone and the Internet.

In 2002, the bank claims to have lent less than €300 million to Irish mortgage customers. In 2003, it said, this figures increased to €410 million. More than 60 per cent of its mortgage business is generated by brokers. The bank has also established a considerable presence in the motor finance market.

Bank of Scotland Ireland employs 700 people and has offices in Dublin, Belfast, Cork, Galway, Limerick and Waterford.