BoSI had been trading under the Halifax brand in Ireland and will stop operating as a licensed bank on 31 December.

BoSI’s business will be transferred to Bank of Scotland after a strategic review revealed little opportunity for growth.

The decision, which follows Lloyds’ announcement earlier this year of plans to close down the retail and intermediary BoSI business, follows the bank’s admission last month that as much as 90 per cent of its €13.3bn commercial property book in Ireland was impaired.

BoS will take charge of the run down of the current lending portfolio and the bank said current BoSI lending customers will see “no change.”

All loans will be transferred to BoS with the same repayment arrangements in place until maturity or account settlement. Lloyds said it will work with depositors at BoSI to ensure a smooth transition of their banking arrangements. BoSI will also cease to provide working capital and wealth management services by the end of the year.

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The bank said: “Customers will be contacted in the coming weeks to advise them how these changes would affect them.”

The group plans to employ an independent service company to oversee administration for the BoSI banking business, subject to approval.

Lloyds said it is looking to transfer the majority of BoSI employees and that it is “committed to working through these proposed changes with employees carefully and sensitively.” Over 800 employees were briefed by management this morning and the union Unite has also been involved in discussions with the bank.

The Group’s other business operations in Ireland and Northern Ireland – including its Halifax branch network, customers service centre in Northern Ireland and its insurance operation in Shannon – are unaffected by this announcement.