Bank Of Scotland Pulls Out Of Ireland

When Ireland's property boom was taking shape, foreign banks rushed to its shores to get a piece of the action.

But now that it's collapsed, some can't get out of the country quick enough.

With no quick buck left to make, Bank of Scotland (Ireland), which is owned by the Lloyds Banking Group, is cutting and running from the Irish market.

It says it will cease to operate as a licensed bank at the end of this year, citing "little opportunity for scalable growth in the future".

36 people will lose their jobs and a further 800 will be transferred to a new managed services company that is being established to handle the loan books over the next decade.

All those jobs will be eventually lost too.

The bank entered the Ireland when it bought Equity Bank in 1989, and concentrated on lending to small businesses without making much impact.

But in 1999 it entered the mortgage market in dramatic fashion - by offering the cheapest mortgages on the market, in some cases up to a full 1 per cent lower than their rivals.

That forced many other banks into substantially reducing their lending rates too.

The bank was also the first to introduce the concepts of tracker mortgages and interest-only loans - and along with others, it started to offer 100% mortgages.

In the context of a runaway property market, all other banks were not far behind in offering the same products.

But as a newcomer to the market, BoSI was hit even harder than the traditional banks, with a bigger proportion of rubbish property loans on its books.

Now, it's told anyone with money in current, deposit or treasury accounts, that will have to make other arrangements by the end of the year, and the bank will not be taking on any new business.

Those who have loans must continue to make repayments - but Lloyds is looking to sell-on the loan book.

Minister for Finance Brian Lenihan said it was clear there was too much lending in Ireland at the height of the boom and "many foreign banks participated in the frenzy".

"Thankfully the Irish taxpayer does not have to pay for these mistakes," he said.

Business groups have reacted with fear and anger to the news.

The bank's 12,000 business customers will now have to find a new bank to lend to them by the end of the year - and that will not be easy in the current climate.

One sector that will be particularly affected is the hotel industry.

The bank provides 20% of all loans to the sector and there are fears that up to 150 hotels could be forced to close as a result.

The bank provided crucial seasonal funding facilities to many hotels to get them through cash-flow issues during the winter.

But that facility will end in December, just when hotels need it most.

Just four years ago, Bank of Scotland Ireland, bought the ESB's network of shops around the Republic of Ireland, and transformed them into bank branches under the name Halifax.

It looked like a major commitment to the Irish market.

But earlier this year, it announced the closure of that network and the loss of 750 jobs.

Now, it's confirmed it's handing back its banking licence at the end of the year, and getting the hell out of the country.

Editorials in Irish newspapers have described it as "a cruel outcome of greed" and "a devastating blow to workers and customers".