Irish clover has three leaves!

It has been reported that the Irish government’s bad bank, the National Asset Management Agency (NAMA), is set to buy up, at a discount, ‘bad’ loans worth up to £74bn, off Irish lenders.

The move has been viewed as a potential stimulus to a series of mergers, closures and an overall reduction in banking competition in the Republic.

One prevailing view is that there is only room, in a country of 8 million people, for three major banking groups going forward, Allied Irish Bank, Bank of Ireland and a ‘third force’ possibly comprising Permanent TSB, Irish Nationwide and EBS.

 We consider that there is merit in the view that some consolidation could be beneficial in the long term. Especially if this focused on retaining strong branded distribution franchises supported by larger scale and more efficient customer servicing propositions and centralised functions.

Our experience of banking integration in the Republic however would suggest there could be lots of nasty surprises in the long grass along the path leading to this rather oversimplified view of the future for the Republic’s FS sector.

It’s not impossible to envision a future with three major players, but it will take a mightily focused and driven management team to deliver such an outcome, over a prolonged period of time and with recourse to many ‘friends’ in high places.

We wish those who might be up to create this 'third force' all the very best of luck.

We can assure you, you’ll need it!