HBOS [HBOS.L], which has doubled profits since its creation from the merger of Halifax and Bank of Scotland in 2001 and is now Britain's fourth-biggest bank, has bought the Electricity Supply Board retail business in Ireland, giving it the access to a nationwide branch network.
ESB is Ireland's dominant energy supplier and has been owned by the state since the 1920s. The group has agreed to pay E120 million for ESB business, which includes 54 branches, a consumer loan book and 400 staff. The bank will also provide ESB's Billpay and cash payment facilities, which will give it access to more than 185,000 existing customers.
HBOS has been active in Ireland's mortgage market since 1999 and has six offices on the island of Ireland claiming a 20% market share in local business banking, according to figures from the Herald newspaper. It is hoping that the new purchase will give it 6-7% of the overall banking market in the Republic. The group is planning to introduce branches that will be open six days a week and will, according to HBOS, make banking "a pleasurable experience" for customers.
The biggest strength of HBOS in Ireland will be its price-led expansion strategy which has proved so popular on the UK mainland. The bank's initial plans in the Republic include the introduction of seven retail banking products over the coming month and a further three before the end of the year. Additional products will also be introduced in 2006, including a "competitive" personal current account.
HBOS has assumed a very strong position in the UK current account market in recent years thanks to its aggressive targeting of the switcher market through a combination of strong marketing and price-competitiveness. It currently controls approximately 11.9% of the market, with 7.1 million UK current accounts, according to Datamonitor.