Michael Lafferty writes: Jaja Finance announced last Friday that it will acquire the credit cards business of Bank of Ireland UK. This is a great move for Jaja, whose CEO Neil Radley is a world-class credit cards professional. Jostein Svendsen, the prime mover behind Jaja is no novice either, having made a fortune from successful credit cards businesses in both Norway — and Germany, of all places. I expect Jaja to become one of the world's great credit cards success stories over the next decade.
The once great Bank of Ireland understandably needs to rebuild under its new CEO, ex-HSBC Francesca McDonagh. It suffered severely in the Global Financial Crisis from the usual mixture of wheeler-dealers and incompetents and would not be around today without the support of a massive Irish taxpayer-funded bailout. As Bank of Ireland was ranked 496 out of 500 banks in the last Lafferty 500 global bank quality benchmarking study, Ms McDonagh has a mega-challenge on her hands. She should also have a quiet chat with Patrick Honohan, the former Central Bank governor who does not mince his words in his new book "Currency, Credit and Crisis", and I quote: "... the continued evidence of sharp practice by banks in Ireland seeking to find ways of profiting from customer inertia or innocence suggests that cultural shortcomings remain in the system — a deficiency for which no obvious solution has emerged". The Irish Banking Culture Board seems to have decided that the best way of dealing with this is to blame everything on the retail bankers, ignoring the boards of directors, management boards, and the all-powerful influence of the corporate bankers.
Longer-term, I expect to see a strengthened BOI returning to the British credit cards market. There is no better opportunity out there to create sustainable value for long-suffering shareholders.
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