| 9.9°C Dublin

Hotels hit by BoSI exit

HOTEL industry representatives have warned of the "catastrophic" effects of the withdrawal of working capital facilities at Bank of Scotland (Ireland), as the bank provides more than €30m to the sector.

The Irish Hotel Federation said that up to 150 hotels could face an uncertain future as the financial institution supplies 20pc of loans to the hotel sector.

Yesterday BoSI, an aggressive lender during Ireland's property boom, announced that it would wind down operations here.

It will now surrender its Irish banking licence and transfer the loan book to its UK parent.

Bank bosses confirmed that 90pc of employees would be transferred to an independent service that would administer the runoff of its Irish business banking unit over the next few years and 36 people face compulsory redundancy.

Business representative groups are worried about the impact of the closure on Irish businesses, particularly in the hotel and small and medium enterprise (SME) sectors.

Mark Fielding from the Irish Small and Medium Enterprise (ISME) said the closure would lead to a further deterioration in competition for SME lending.

Fine Gael deputy finance spokesman, Kieran O'Donnell said that it was a "bad day" for the banking sector. "The departure of BoSI will inevitably lead to higher bank charges and less competitive products," he said.