For the 50,000 or so Halifax customers and 750 workers are losing their bank and their jobs, last week’s announcement is going to result in considerable inconvenience and financial loss.
The end of this high street bank’s presence has come as a shock, but it shouldn’t be a surprise.
The Irish management did the right thing – it recognised that it was unsustainably loss-making and rather than seek to throw more good money after bad, it decided to call it a day.
It’s a pity the same hadn’t been done with the other seriously impaired Irish banks and building societies before their managements opted in October ‘08 to save their own skins by panicking the Department of Finance and the Government into accepting responsibility for all their debts and liabilities.
We’ll never know now exactly what would have happened if the stakeholders in the Irish banks had lost their money a year ago and not just shareholders and present and future taxpayers.
The foreign bond-holders would have certainly been burned (as they were in many other jurisdictions), and, unless some form of a Swedish-style ‘good bank’ solution had been put in place, deposit holders would have lost savings in excess of the deposit guarantees.
Yet it’s highly unlikely that the entire Irish nation or our ability to keep borrowing on foreign debt markets would have been tarnished forever.
Had we also instituted proper debt and wage reduction and introduced public spending cuts that the Government is attempting now, though with much less success than is being reported, the picture would look somewhat different.
I say this by way of suggesting that the Halifax closure is probably just the start this year of a much bigger contraction in the Irish banking sector this year.
Why? Due to rising unemployment, increased saving and no sign of our biggest trading partners showing any serious recovery, there is simply no justification in keeping thousands of people underemployed in the domestic and commercial banks.
I expect by the end of this year it won’t just be Halifax branches that will be shuttered. As a bank user, you need to be a step ahead of what is likely to come next.
So what should you do? If you’re a Halifax customer, you need to find a new home for your current accounts, savings accounts, credit card and other loans and ideally your mortgage.
My advice? Aim for a no-cost current account with convenient access.
The debt-free and solvent PostBank, which is located in post offices that are open on Saturdays (but not necessary at lunchtimes!) offers free banking, overdrafts and credit cards and insurance products, but still no personal loans or mortgages.
Postbank has good online bank access, but the Rolls Royce of on-line accounts is National Irish Bank’s, which is owned by Danske Bank of Denmark, which has weathered the global recession well, even if its Irish operation has not.
Danske and NIB insist they are here to stay; ditto for Ulster Bank owned by the struggling Royal Bank of Scotland.
Permanent TSB, which has not received Government aid has a solvent parent in Irish Life, while AIB and Bank of Ireland’s dire financial positions are well known by now.
Ironically, since they are under Government orders to make mortgage lending available, they might be the best options for Halifax variable rate/ex-fixed rate home loan customers who want to shift their mortgages given Bank of Scotland Ireland’s uncompetitive rates.
Halifax credit card (and personal loan) customers who can’t shift their balance to another provider will be offered a term loan from Bank of Scotland Ireland, but probably not at competitive rates.
It shouldn’t matter an iota what interest rate you pay (or who the provider is) if you arrange to pay off your credit balance every month by direct debit.
If you can’t do so, but have a sterling credit record you could consider shifting to Bank of Ireland or Tesco which are offering a zero per cent for six month transfer offer.
Stop spending on it then, switch it to a direct debt that clears all or most of the balance every month.
As to where Halifax ex-customers (and the rest of us) should put our savings, I’ll return to this in future columns.
For all your banking and insurance needs, check out Postbank at your local post office or LoCall 1890-30-040. Jill is also available via Email (firstname.lastname@example.org)