Published: Thursday, 18th February, 2010 10:00am

Halifax customers need to take action

Pic by==: 97

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 (from its UK parents, Bank of Scotland/ Lloyds Bank and the UK taxpayer that owns 43% of Lloyds) it decided to call it a day.

Pity the same hadn't been done with the other seriously impaired Irish banks and building societies before their managements opted in October 2008, in the immediate aftermath of the global financial (and Iceland) meltdown, to save their own skins by panicking the headless chickens in the Department of Finance and the government to accept 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 (As has happened to the excess-savers in the 150 or so US local banks that failed in the last year).

But it is highly unlikely that the entire Irish nation, or our ability to keep borrowing on foreign debt markets would have been tarnished forever, especially if 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.

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.

With unemployment still rising; practically no domestic investment happening; a major cutback in Irish consumer spending; more cutting back on debt and increased saving and some of our biggest trading partners like the UK, US, Germany and other European countries not yet in any genuine recovery, there is simply no justification to keep 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 are 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 if you are not among the 70% of Halifax homeloan customers already on a tracker mortgage.

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 on-line 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 (which is owned by the struggling Royal Bank of Scotland. Permanent TSB, which has not received government aid has a solvent parent in Irish Life; AIB and Bank of Ireland's dire financial positions are well known by now, though ironically since they are under government orders to make mortgage lending available, they might be the best options for Halifax variable rate or ex-fixed rate home loan customers who want to shift their mortgages in the face of uncompetitive rates from Bank of Scotland Ireland.

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