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20/08/2010
Hotels Calls BoSI Closure 'Catastrophic'
The Irish Hotel Federation has said some 150 hotels may be under threat after a decision by Bank of Scotland to close its Irish operation.
The bank, which announced its closure yesterday, currently provides 20% of all loans to the hotel sector and will withdraw from the business market by the end of the year.
This morning Paul Gallagher, President of the Irish Hoteliers Federation (IHF), said that the Hotel Industry is currently holding an excess of €2bn in loans with the Bank.
Mr Gallagher said: "In addition to long-term loans, the existing support provided by Bank of Scotland (Ireland) to its members included vital seasonal funding to carry them through the quieter winter period.
"Unilateral withdrawal of these working capital facilities at the end of December would be catastrophic, particularly at a time when other banks are reluctant to take on new customers and when asset securities would continue to be held by Bank of Scotland (Ireland)."
Mr Gallagher went on to call for a Government 'guarantee' scheme for the sector.
“The Government and regulatory authorities also have an obligation to protect the economically important hotel sector from being at the mercy of the unilateral withdrawal of such vital facilities,” Mr Gallagher said.
Responding to the news of the bank's withdrawal, Labour Spokesperson on Finance
Joan Burton said she had "great sympathy" for the 36 employees of the bank who would be joining the 750 who lost their jobs at the bank earlier this year.
"It was an open secret that BoSI wanted out of Ireland, having already shut down their network of Halifax branches earlier this year," Ms Bruton said.
She added: "Despite repeated government assurances that they have Ireland’s banking problem under control, many foreign retail banks operating in the country are anxious curtail their activities here. At this stage, many just want to cut their losses and would sell out in an instant if they could find a buyer.
"Neither the Irish regulator nor the banks’ UK owners seem to have exercised detailed supervision of this disastrous switch from traditional retail banking to speculative property and development lending."
(DW/GK)
The bank, which announced its closure yesterday, currently provides 20% of all loans to the hotel sector and will withdraw from the business market by the end of the year.
This morning Paul Gallagher, President of the Irish Hoteliers Federation (IHF), said that the Hotel Industry is currently holding an excess of €2bn in loans with the Bank.
Mr Gallagher said: "In addition to long-term loans, the existing support provided by Bank of Scotland (Ireland) to its members included vital seasonal funding to carry them through the quieter winter period.
"Unilateral withdrawal of these working capital facilities at the end of December would be catastrophic, particularly at a time when other banks are reluctant to take on new customers and when asset securities would continue to be held by Bank of Scotland (Ireland)."
Mr Gallagher went on to call for a Government 'guarantee' scheme for the sector.
“The Government and regulatory authorities also have an obligation to protect the economically important hotel sector from being at the mercy of the unilateral withdrawal of such vital facilities,” Mr Gallagher said.
Responding to the news of the bank's withdrawal, Labour Spokesperson on Finance
Joan Burton said she had "great sympathy" for the 36 employees of the bank who would be joining the 750 who lost their jobs at the bank earlier this year.
"It was an open secret that BoSI wanted out of Ireland, having already shut down their network of Halifax branches earlier this year," Ms Bruton said.
She added: "Despite repeated government assurances that they have Ireland’s banking problem under control, many foreign retail banks operating in the country are anxious curtail their activities here. At this stage, many just want to cut their losses and would sell out in an instant if they could find a buyer.
"Neither the Irish regulator nor the banks’ UK owners seem to have exercised detailed supervision of this disastrous switch from traditional retail banking to speculative property and development lending."
(DW/GK)
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