Lloyds pulls out of Ireland

DUBLIN (Reuters) - Britain's Lloyds Banking Group (LLOY.L) is closing its Irish business banking operation and effectively pulling out of the country in the latest blow for a local industry ravaged by bad debts and recession.

Lloyds shuttered its 44-branch retail business, Halifax, in Ireland earlier this year and said on Thursday it had changed its mind about maintaining its business operation after concluding there was little opportunity for growth.

Lloyds employs around 800 people in its Bank of Scotland (Ireland) unit and it said around 90 percent of them would transfer over to an independent service company that would administer the runoff of its Irish business banking unit.

"We don't know who this service company is going to be. The management said it's their intention to give us a guarantee of no further jobs losses until 2013, but we were told six months ago that Lloyds Banking Group were committed to this market," said Brian Gallagher, regional officer with the UNITE trade union.

Lloyds were in the process of selecting and appointing the service company, Bank of Scotland (Ireland) Chief Executive Joe Higgins said, adding that the new company could look beyond just working through the bank's 30 billion euro loan book.

"With the expertise and knowledge it would have, the opportunity for the service company is to look for other books that we could potentially manage and service in this market," Higgins told reporters.

Higgins said Lloyds "may well wish to dispose of the book" and that if it did, the proposed service company would seek to provide the same services to any new purchaser.

WIDER JOB LOSSES

Some 750 people lost their jobs when Halifax exited the Irish high street. Thirty six people will lose their jobs following Thursday's announcement.

Lloyds inherited its Irish operations when it took over British lender HBOS at the height of the financial crisis.

HBOS entered the Irish market in the early days of the "Celtic Tiger" economy, and its aggressive lending model helped fuel a disastrous property bubble that pushed Ireland into prolonged recession and brought its banks to the brink of collapse.

Other foreign-owned banks have also exited parts of the Irish retail market, and the deputy chief executive of Danske Bank's (DANSKE.CO) National Irish Bank unit, which is shutting almost half its branches, told Reuters last week that more would likely leave.

Around 6,000 finance jobs have been lost in Ireland since the banking crisis kicked off two years ago and the country's leading banking trade union said on Tuesday that a further 4,000 jobs will likely be axed over the next year as lenders continue to shrink their operations.

Lloyds operations in Northern Ireland will be unaffected. (Writing by Carmel Crimmins; Editing by Jon Loades-Carter)