HBOS PLC, Britain's fourth-largest bank, announced Tuesday it will open a branch network in neighboring Ireland in a rare challenge to the country's dominant domestic banks. HBOS Chief Executive James Crosby said the bank expected to have 46 branches operating in Ireland within the next 14 months. He said the company would gain market share by offering account holders higher interest rates and longer opening hours.
The bank said its Irish division, Bank of Scotland (Ireland), would offer monthly savers an interest rate of 3.75 percent, a half-point higher than the highest current rates offered by Irish banks. It hoped to gain heavy levels of deposits when hundreds of thousands of government-sponsored, tax-free savings accounts mature later this year.
"Our strategy is about giving Irish banking customers value for money and our shareholders a better return," Crosby said. HBOS' move marks the first major attempt by a British bank to make inroads against Ireland's two dominant home-grown banks, Allied Irish Banks PLC and Bank of Ireland PLC, which control more than 90 percent of personal bank accounts in this country of 4 million. Consumer rights groups have repeatedly accused both banks, among the most profitable in Europe, of charging excessive fees to customers in what remains a relatively uncompetitive market.
HBOS, which was created by the merger of Halifax and Bank of Scotland in 2001, has 22 million customers in its core British market. Until now its Bank of Scotland (Ireland) division had concentrated on business lending and mortgages, a market it shook up when it entered in 1999 offering much lower rates and better conditions.
Last year HBOS bought a chain of stores previously operated by Ireland's Electricity Supply Board to use as branch locations. But its 46 sites, the first of which is scheduled to open Wednesday, pale in comparison to Allied Irish's 281 branches and Bank of Ireland's 265. Analysts said HBOS would find it difficult to poach business from Ireland's big two banks, both of which were expected to launch rival promotions, reports the AP.
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