Bank of Scotland to close its Irish operations

Lloyds Banking Group is to pull out of the Irish market, claiming a lack of opportunity for growth in the country.

The decision to close down its corporate banking operations following a "strategic review" of Bank of Scotland (Ireland) comes just six months after it announced it would axe its retail banking arm in the country, with the loss of 750 jobs.

It is believed that the dominance of Ireland's two main business banks - Bank of Ireland and Allied Irish Bank - combined with the collapse of the "Celtic Tiger" economy have made business growth unsustainable for Lloyds.

BoSI's business loan portfolio, worth €30 billion (25bn), will be managed by an external services company, which will take on the majority of the 840 Irish staff employed by the bank. The company, which is yet to be appointed, will continue to manage the loans, which have an average of a ten-year life span, until all have been paid off.

The bank, which moved into Ireland just 11 years ago with the acquisition of Equity Bank, is also to relinquish its Irish banking licence and legally transfer the loans to its Bank of Scotland parent company.

"The review concluded that there was little opportunity for scalable growth in the future and it is therefore now intended that the business currently carried on by BoSI will transfer, pursuant to a court process, to Bank of Scotland," the company said in a statement.

A spokesman added that it was "too early" to say whether further job losses were likely to be made as the size of the loan book decreased.