Bank of Ireland [IRE] has agreed to sell the 97-strong branch network of its Bristol & West (B&W) subsidiary to Britannia in a deal that has been heralded as the first "remutualization" in UK banking history. The transaction will see the B&W business return to building society status, and Britannia will acquire 850,000 new savings customers.
Bank of Ireland will retain the B&W brand and all other parts of the business, with a particular focus on the B&W-branded mortgage business that it will focus on intermediary and direct channels. As a result, all the acquired B&W branches will be rebranded as Britannia.
The move come as little surprise following Bank of Ireland's announcement last year that the B&W branch network was no longer considered part of the core business. Although the GBP150 million price tag is a far cry from the GBP600 million Bank of Ireland paid for B&W in 1997, a period that saw a wave of UK building society demutualizations including Halifax and Northern Rock, the bank will keep a section of the business with profitable prospects and successfully dispose of the loss-making unit.
Britannia by contrast will be cementing its place as a more serious second tier contender to the UK's big five banking groups, leaving it second only to Nationwide among building societies in the personal deposit space. However, while the bank has been keen to stress that all staff will maintain a role in the combined business, generating significant value from this acquisition is realistically going to need a fuller integration with reductions in staff numbers and rationalization in back office areas.
Nevertheless if Britannia can extend its own solid progress to the acquired B&W business, and exploit strong consumer appetite for cash-based savings with its higher rate offers, it will represent a significant enhancement of its competitive position. 'End Intelliext
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