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The collapsing British housing market was dealt a further blow yesterday after the Bank of Ireland said it was dramatically scaling back its UK mortgage operation, with the loss of at least 600 jobs.
The bank, which has more than £29bn invested in British mortgages, also said it was closing down its Bristol & West brand, which has offered loans and savings in the UK since 1851.
Two Bank of Ireland offices in Reading and Solihull are expected to be closed later this year.
The bank said that from tonight, Bristol & West mortgages would no longer be offered either directly to British homebuyers or via mortgage brokers, which in the past have supplied around 80% of its business.
Bristol & West, which was one of the first of the big lenders to offer loans for investors in the buy-to-let market, said it would continue to offer UK home loans through its partnership with the Post Office - but on a dramatically reduced scale. Six mortgage deals will disappear when it closes its doors.
A Bank of Ireland spokesman said the move was in line with the company's aim of reducing its exposure to the UK's tumbling housing market. "The measures announced today are in keeping with the plans outlined in our interim results last November. The Bristol & West brand will slowly disappear over the next few years. The aim of these measures is to reduce our dependency on wholesale funding and significantly reduce our cost base."
He said the 300,000 British homeowners holding a current Bristol & West mortgage would not be affected by the pull-out. The bank plans to run down its loan book in a similar way to Northern Rock, with borrowers not being offered a new deal when their existing one comes to an end. The company will continue to offer mortgages through its 44 Northern Ireland branches.
Bank of Ireland has been hit hard by the increased cost of borrowing money on wholesale markets. It is understood to want to bring the amount it has lent against UK homes down to £15bn over the next five years.
Staff at its Reading offices and Solihull processing centre are now being consulted about the job losses. The company's Bristol centre will remain, but may see staff numbers reduced.
David Hollingworth, of Bath-based mortgage broker London & Country, described the announcement as another blow to the UK housing market. "It's more grim news, and the end of a brand that's been around for years. In fairness, Bristol & West hasn't been doing a lot of new loan business through us since the start of 2008, but it is still a further blow to the sector.
"The company was quite a big player when buy-to-let took off, and although it will continue to offer mortgages through the Post Office, given what it has said about its financial position, it doesn't look as though it is going to be at the top of the best-buy tables," he said.
Bristol & West's demise ends more than 150 years of trading. The demutualised company was bought by the Bank of Ireland in 1997. In 2005, Bristol & West sold its savings and investment business to Britannia building society. The deal also included its branch network, as well as its direct savings business.
The Bank of Ireland said it would continue to employ around 3,400 staff in the UK.
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