Fortis to duplicate Belgian success with An Post joint venture
Having gained ten years of experience working with the state-owned Belgian post office, Fortis has finalised an agreement with the Irish post office An Post to create a similar financial services joint venture in Ireland.
The agreement with An Post is part of Fortis’s strategy to expand internationally, particularly in recognised European growth markets such as Ireland, Russia and Germany.
The two organisations are creating a new retail bank, which will be a 50/50 partnership between them, and will have an initial capital of 112 million (euro). Fortis will pay 56 million (euro) in cash and An Post will contribute the balance.
Under the agreement, An Post will provide Fortis with access to its network of 1,400 post office branches, while the latter will contribute its international experience in bancassurance.
The new retail bank will offer a broad range of financial products and services to the Irish market, including banking, savings products, insurance, mortgages and credit cards. Telephone and internet banking services will also be offered. Roll-out of these products will commence in 2007.
The joint venture will start operations with a workforce of 250 people, but aims to employ 500 people within five years. It is expected to receive regulatory approval and a banking licence early in 2007.
While Fortis considers greenfield start-ups the right approach for certain countries, it was interested in forming a joint venture with An Post in Ireland because of the latter’s large network of branches and strong, well-known brand name.
An Post has 1,395 post office branches and delivers mail to 1.3 million homes in Ireland. The post office has recently been expanding its range of services to include direct mail for businesses and also now sells savings products through its Post Office Savings Bank subsidiary.
Fortis’s Belgian joint venture–La Banque de La Poste–has attracted 6 billion (euro) of deposits in terms of savings and current accounts in just ten years by offering simple and accessible products, which it claims are better priced than those of the local banks.
It has a customer base of 1.2 million people.
Although La Banque de La Poste sells its products via 1,300 Belgian post office outlets, it employs only 200 people. The branch staff and 600 back-office staff are all employed by the Belgian post office, which receives a commission for all sales via its branches.
