The Irish market is an attractive proposition for the UK's fourth largest bank. It has been one the best performing markets in Europe in recent years, and there is little sign of a downturn in the near future. HBOS will be able to take advantage of the higher banking margins in Ireland: the difference between the rates at which HBOS can borrow and lend money in Ireland is twice that in Britain.
The newcomer's intended opening hours of 'nine to five' and Saturday mornings will put immense pressure on any neighboring rival branches who are used to operating for as little as four hours a day. Combine this with a range of highly competitive products that HBOS will bring with it and the established Irish banks have a problem. Therefore in the localities where HBOS establishes branches, it would be no surprise if the Irish banks lose significant custom.
Undoubtedly the established Irish banks will need to make their products more competitive and attractive to customers while also looking at amending the current culture of short branch opening hours, which has been in place for too long, if they want to minimize HBOS's effect on their business.
However, the UK bank's plans are for a network of 46 branches to be established over a 14 month period. Currently, Bank of Ireland has 265 branches and Allied Irish Banks has 280 branches. This gives the big two Irish banks some time to adjust and meet the threat that HBOS will pose. In particular, the big two Irish banks should look to execute some 'quick wins' in customer service, such as extended branch opening hours, in a bid to stave off HBOS's attack.