Bloomberg News

Danske Bank Revamps Irish Unit, Aiming for 10% Share

April 18, 2006

Danske Bank A/S (DANSKE), the Danish lender that last year made its first foray into Ireland, hopes a 70 million-euro ($86 million) revamp of its Irish unit will help it win about 10 percent of the market within about five years.

Danske's Dublin-based unit, National Irish, has about 3 percent of the consumer banking market and 4 percent of the market for business customers, said Andrew Healy, who leads the business, at a news conference today. The lender plans to add 15 branches over the next three years to its current base of 59.

Danske and Edinburgh-based HBOS Plc are seeking to challenge Dublin-based Allied Irish Banks Plc (ALBK) and Bank of Ireland Plc, which control about three quarters of the nation's current accounts. Irish economic growth will outpace that of the 11 other nations sharing the euro this year and next, the European Commission has forecast, fueling sales of loans, savings and pensions.

``We want to make NIB the strongest challenger in the Irish market,'' Healy said.

National Irish said it's the first Irish bank to end penalties for unauthorized overdrafts, known as referral fees, and will pay interest of as much as 1.75 percent on some checking accounts. Its Internet banking service, a mainstay of the new offering, will send customer mobile phone text messages when their account is credited with their pay checks or is about to go into the red, Healy said.

``Comparing numbers between banks is never easy, but it appears the Dankse/NIB offer is competitively priced, but not something that should unnerve investors in the Irish financials,'' said Eamonn Hughes, an analyst at Goodbody Stockbrokers in Dublin. ``We suspect they will add incrementally to competition levels in Ireland, rather than transform them.''

Shares of Irish Life & Permanent, which depends on the domestic market, fell 35 cents, or 1.8 percent, to 19.6 euros in Dublin. Shares of Allied Irish fell 1.3 percent to 18.50 euros, and Bank of Ireland Plc's stock dropped 1.2 percent to 14.62 euros.

In February 2004, Danske Bank paid 967 million pounds ($1.7 billion) to buy Belfast, Northern Ireland-based Northern Bank and Dublin-based National Irish from National Australia Bank Ltd. By contrast, HBOS spent 120 million euros to buy a chain of electronics stores from the state power company and is converting them into bank branches.

To contact the reporter on this story: Brian O'Neill in Dublin at bjoneill@bloomberg.net.

To contact the editor responsible for this story: Katherine Snyder at ksnyder@bloomberg.net


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