BOi closing 103 branches in ROi/Ni - new deal with An Post

Sheep Shagger · 01-03-2021 8:36am #1

Bank of Ireland said it has taken a decision to close 103 branches in the Republic of Ireland and Northern Ireland.

The branches closing are predominately self-service locations which do not offer a counter service, Bank of Ireland said. The branches are due to close by the end of September.

Bank of Ireland said it had agreed a new partnership with An Post which will offer Bank of Ireland customers banking services at more than 900 locations across Ireland.

This will include over the counter cash and cheque lodgements and cash withdrawals, with longer weekday opening hours than traditional bank branches as well as Saturday opening.

It said the closing Bank of Ireland branches all have a post office within, on average, less than 500 metres.

Publishing its annual results for 2020, Bank of Ireland said customer preferences continue to evolve, and its significant transformation investment over recent years has improved its technology infrastructure, digital offering and customer engagement.

"At the same time, we have seen a sustained decline in the use of our branches," it said.

"Our customers tell us that they expect visits to branches to reduce further as they move away from cash towards digital and contactless payments."

The bank said it is adapting to these clear changes in behaviour as it works towards a longterm, sustainable and modern banking system.

"Accordingly, following an extensive review of our network, we have taken the decision to close 103 branches in the Republic of Ireland and Northern Ireland," it said.

"We will continue to operate 182 branches across the island of Ireland. The branches will be an integral part of the Group's strategy of blending physical and digital services to meet our customers' evolving needs," it added.

Bank of Ireland also today reported an underlying loss before tax €374m for the year to the end of December.

Its net interest income of €2.1 billion was 2% lower than 2019 due to lower new lending volumes and the on-going impact of lower interest rates.

The bank said its market share of new mortgage lending in Ireland averaged 25.5% in 2020 representing a 2% increase in market share in the year.

Bank of Ireland said its outlook continues to be impacted by Covid-19, adding that its 2021 total income is expected to be broadly in line with 2020 reflecting lower net interest income, higher business income supported by its Wealth and Insurance business and a lower charge for valuation items.

Costs will continue to reduce with 2021 costs to be less than €1.65 billion and a new 2023 cost target of €1.5 billion, it added.

Bank of Ireland CEO Francesca McDonagh

Bank of Ireland noted today that its mobile app is its most popular way to bank, with almost half a million customer logins every day and traffic up by a third in the past two years.

It said that seven in ten personal customer product applications are made digitally, and it expects this to grow to over eight in ten by the end of this year.

Meanwhile, the number of people visiting branches has sharply declined, and is now just over half of what it was in 2017. Footfall at the branches which are closing is down even more, by over 60% since 2017, the bank added.

Francesca McDonagh, Bank of Ireland's group chief executive, said that 2020 was an exceptionally challenging year for the bank.

The CEO said Bank of Ireland's focus was on supporting its customers through every stage of the Covid-19 crisis while continuing to deliver its strategy.

"When Covid-19 hit, we radically changed how we operate so that we could provide the services our customers needed, including payment breaks for mortgages and business loans. Our speed of response was made possible by the investments we have made in transforming our culture, systems and business model," Ms McDonagh said.

She also said the bank managed to grow its market share in Irish mortgages and SME lending, made good progress in the reshaping of its UK business, and further reduced costs.

"Today, we are setting out our plans to go further, with a new cost target for 2023," the CEO said.

"For many years, the trend to digital banking has been evident, with customers using branches less and less. Covid-19 has accelerated this changing behaviour, and we've seen a seismic shift towards digital banking over the past 12 months," Francesca McDonagh said.

"We’ve now reached a tipping point in customer preferences between online and offline banking. That’s why we’ve also announced changes to our branch network in Ireland and Northern Ireland today, while protecting access to local banking services though a new arrangement with An Post," she added

https://www.rte.ie/news/business/2021/0301/1199958-bank-of-ireland/

Sheep Shagger · 01-03-2021 9:01am

Can't say I'm suprised...staff are the worst off.

BOi get to ditch a chunk of overheads in running a branch network whilst customers get service over extended hours using An Post who have a larger footprint.

malinheader · 01-03-2021 9:29am

Another casualty of covid.

But some large institutions might see the covid as a plus to cut costs.

Between Ulster bank and BOI and the small businesses that will go to the wall I fear the end is in sight for alot of towns and villages

drunkmonkey · 01-03-2021 9:29am

You could see a lot of post offices close after July, an post will have their own cost saving measures announced.

3DataModem · 01-03-2021 9:38am

It's a race to the end.

Can BOI stay relevant for enough time that they shed cost to stay competitive before Revolut (and similar) have increased their offering to fully compete (loans, mortgages, etc).

The answer is no. But the senior management can't admit that the Court, and the Court can't admit that to the shareholders, so it's dance dance dance until they are acquired.

Sheep Shagger · 01-03-2021 9:56am

List of affected branches being published at 10.30am.

Jim2007 · 01-03-2021 10:03am

malinheader wrote: »

Another casualty of covid.

It's not the case, the banking industry all across Europe has been in crisis for the past 10 years or more. We're just nearing the end game.

malinheader wrote: »

Between Ulster bank and BOI and the small businesses that will go to the wall I fear the end is in sight for alot of towns and villages

With the proof of concept for WFH, business motivaton and the legal right to WFH, I hope to see a revival in village/town live, with people taking the opportunity to improve their quality of life.

Geuze · 01-03-2021 10:08am

"The branches closing are predominately self-service locations which do not offer a counter service, Bank of Ireland said. The branches are due to close by the end of September."

I am not aware of such a type of branch.

I presumed that all branches have counters, with staff?

drunkmonkey · 01-03-2021 10:12am

They're gone a few years, might be one at a counter with the shutter down unless someone comes up, there's staff there to show you how to use the machine, AIB are gone a lot like that as well.

Jim2007 · 01-03-2021 10:12am

3DataModem wrote: »

It's a race to the end.

Can BOI stay relevant for enough time that they shed cost to stay competitive before Revolut (and similar) have increased their offering to fully compete (loans, mortgages, etc).

The answer is no. But the senior management can't admit that the Court, and the Court can't admit that to the shareholders, so it's dance dance dance until they are acquired.

The problem is that the race to the bottom is going on all over the industry and there is no one sitting in the wings waiting to acquire any of them.

Eventually many will become just name plates rather than acquisitions.

lisasimpson · 01-03-2021 10:12am

Not surprised. BOI have made it clear in recent years they dont want customers in branches. Esp with the whole could you not do that on line greeting. Their on line offering leaves a lot to be desired
I cant see BOI lasting another 10 years to be honest.

cruizer101 · 01-03-2021 10:15am

A fair few branches these days just have a number of self service atms.
They will have one or two staff hovering about if anyone needs assistance but they won't actually handle anything.
Then they will have few booths/offices for stuff like mortgage applications and that.

I think this was on the books anyway, covid may have just accelerated it happening.

I wonder are the post office getting much for carrying out the service for the bank.
AIB and Ulster already operate through the post office.
It makes sense really, one place to deal with all banking cash transactions for all banks.

01-03-2021 10:22am

The post offices and credit unions may as well become banks at this rate.

malinheader · 01-03-2021 10:27am

Mr.S wrote: »

I'd say this was planned pre-COVID too. Big push from all banks towards self-service and there is less need for face to face interaction.

Of course seem people will be put out, mostly the older generations who want / need a more personalised service so you feel bad for them. But, if they have the option of doing their BoI banking at An Post - at least they have that.

Speaking for myself before covid I had never used online banking. Being old school I used to do everything through a branch but since last March I have not been inside a bank and use the online banking.
I think this is where there decreases in footfall comes from and this solves the problem in alot of cases of staying open for older customers.
Still it's always nice to get out and speak to someone face to face I thought. Things are going to be very different when we open up again.

Dempo1 · 01-03-2021 10:35am

Some over the top headlines, shameful one outlet exclaimed. This has been flagged for an age and AIB won't be far behind. To be fair to BOI at least they've made arrangements with AN Post which should help the most vulnerable customers access basic services.

The Branch Banking model is coming to an end. I've been with KBC for years, can't recall the last time I was in a bank branch. I accept cheque /cash lodging can and is a challenge with KBC but even the use of cheques and cash dramatically reducing too. The key of course is a Bank closing branches offering an excellent App, KBC do, I'm not sure about BOI.

01-03-2021 10:36am

Main negative is 100 empty units across the country.

01-03-2021 10:37am

Dempo1 wrote: »

...............To be fair to BOI at least they've made arrangements with AN Post which should help the most vulnerable customers access basic services...............

AIB already have arrangements with An Post.

RobbingBandit · 01-03-2021 10:44am

88 ROI 15 NI Branches seem to be the breakdown

I'm a vulnerable customer and have recently needed in branch support backed up by support from the vulnerable persons unit I luckily live in Dublin suburbs but any customers in rural area may find the loss of their local branch difficult.

artanevilla · 01-03-2021 10:45am

Will be great to see these cost savings passed on to customers.

Messi19 · 01-03-2021 10:47am

artanevilla wrote: »

Will be great to see these cost savings passed on to customers.

Ha. Good one!

ArraMusha · 01-03-2021 10:54am

BOI should not be allowed to do this. OK for me any tech savy customers but older folks are being seriously inconvenienced at a VERY stressful time....lord jaysas..no consideration.

I'm making plans to leave BOI. Not due to this on its own, mainly due to the fees they brought in to have an account. KBC here I come and use the credit union for cash and drop in services.

marvin80 · 01-03-2021 10:58am

drunkmonkey wrote: »

You could see a lot of post offices close after July, an post will have their own cost saving measures announced.

An Post might close more rural Post Offices but on the other hand I thought this might actually save a lot of Post Offices. Possibly more footfall and business as they have more services to offer.

ED E · 01-03-2021 11:01am

ArraMusha wrote: »

BOI should not be allowed to do this. OK for me any tech savy customers but older folks are being seriously inconvenienced at a VERY stressful time....lord jaysas..no consideration.

I'm making plans to leave BOI. Not due to this on its own, mainly due to the fees they brought in to have an account. KBC here I come and use the credit union for cash and drop in services.

I dont want to pay for it but I want to have it? That your argument?

statto25 · 01-03-2021 11:01am

artanevilla wrote: »

Will be great to see these cost savings passed on to customers.

Bubbaclaus · 01-03-2021 11:05am

ArraMusha wrote: »

BOI should not be allowed to do this. OK for me any tech savy customers but older folks are being seriously inconvenienced at a VERY stressful time....lord jaysas..no consideration.

I'm making plans to leave BOI. Not due to this on its own, mainly due to the fees they brought in to have an account. KBC here I come and use the credit union for cash and drop in services.

Saying BOI "should not be allowed do this" and then saying you are leaving them because of fees in the next sentence. Hilarious.

01-03-2021 11:05am

artanevilla wrote: »

Will be great to see these cost savings passed on to customers.

statto25 wrote: »

I know folk think they are very witty and business savvy but in context "Bank of Ireland also today reported an underlying loss before tax €374m for the year to the end of December."

01-03-2021 11:17am

Augeo wrote: »

I know folk think they are very witty and business savvy but in context "Bank of Ireland also today reported an underlying loss before tax €374m for the year to the end of December."

I've never really understood how (established) banks make a loss. A single mortgage of 200k at 4% over 30 years brings in interest of about €144k. Approximately €100 per week, if you break it down that way.

A quick google tells me there are about 850,000 mortgages in Ireland. Assuming BOI have even 200,000 of them, that's about, €20m per week rolling in the door? (and that's before you take into consideration they do personal loans, charges for current accounts, insurance, etc.) How can their costs surpass that?

Also, you'd assume that, being a bank, if you wanted to make more money, you'd just drop mortgage interest rates to 1.5% or something, and you'd hoover up almost everyone in the country.

drunkmonkey · 01-03-2021 11:23am

marvin80 wrote: »

An Post might close more rural Post Offices but on the other hand I thought this might actually save a lot of Post Offices. Possibly more footfall and business as they have more services to offer.

There's an interm renumeration deal between an post and the postmasters which expires in June, unless the government step in to bail them out there's going to be an avalanche of closures, 891 post offices are in private ownership, an post only own 45. It's government intervention or the retail network is going to collapse. This BOI deal won't come close to saving it.
http://communityandpostoffice.ie/2021/02/government-solution-for-post-offices-to-maintain-vital-services-for-communities/

c.p.w.g.w · 01-03-2021 11:30am

Geuze wrote: »

"The branches closing are predominately self-service locations which do not offer a counter service, Bank of Ireland said. The branches are due to close by the end of September."

I am not aware of such a type of branch.

I presumed that all branches have counters, with staff?

In fairness most BOI branches are self service...

last year I was in one in Limerick City centre, looking to lodge a cheque and some cash at the desk, they were trying to get me to use the self lodgement service*...to the point of refusing to do the lodgement at the desk

*I had an issue in the past using such a machine, in which I was accused of trying to defraud the bank. I had 500€ to lodge, but the machine crashed and they were telling me I only put 100€ in, after a few calls and 1 week later, they agreed it was 500€...No a single apology...BOI technology infrastructure is laughable...

3DataModem · 01-03-2021 11:31am

Deleted User wrote: »

I've never really understood how (established) banks make a loss. A single mortgage of 200k at 4% over 30 years brings in interest of about €144k. Approximately €100 per week, if you break it down that way.

A quick google tells me there are about 850,000 mortgages in Ireland. Assuming BOI have even 200,000 of them, that's about, €20m per week rolling in the door? (and that's before you take into consideration they do personal loans, charges for current accounts, insurance, etc.) How can their costs surpass that?

Also, you'd assume that, being a bank, if you wanted to make more money, you'd just drop mortgage interest rates to 1.5% or something, and you'd hoover up almost everyone in the country.

The average mortgage is on a lot lower than 4%, there is still a stack of trackers and fixed rate loans out there.
The bank has to borrow the money they lend. At the moment that is cheap, but it is mostly not that cheap (can be 0.25% to 0.75% typically).
They also pay interest to savings balances, not much, but something.

They also have 10,000 staff to pay.

01-03-2021 11:41am

Deleted User wrote: »

I've never really understood how (established) banks make a loss. A single mortgage of 200k at 4% over 30 years brings in interest of about €144k. Approximately €100 per week, if you break it down that way.

A quick google tells me there are about 850,000 mortgages in Ireland. Assuming BOI have even 200,000 of them, that's about, €20m per week rolling in the door? (and that's before you take into consideration they do personal loans, charges for current accounts, insurance, etc.) How can their costs surpass that?

Also, you'd assume that, being a bank, if you wanted to make more money, you'd just drop mortgage interest rates to 1.5% or something, and you'd hoover up almost everyone in the country.

Imagine if loads of folk weren't able to pay back those mortgages and the properties mortgaged were worth less than half of what was borrowed to buy them?
Imagine if there was loads of bad commercial loans also?
Imagine rent and wages for the hundreds of branches you have?
Is it now seeming a tad less difficult to understand how a loss could be made?
Imagine lots of your customer base flocking to revolute etc as they don't want to pay for banking anymore?

BOi closing 103 branches in ROi/Ni - new deal with An Post

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