Irish Life & Permanent's retail banking arm, Permanent TSB, is to buy Northern Rock's Dublin-based savings branch, it was confirmed today.

Northern Rock said it decided to sell the postal and online savings branch following a review of its retail funding strategy. The business, Northern Rock Ireland, accounts for less than 5 per cent of the bank's total retail deposits and "no longer meets the commercial objectives of the company".

Northern Rock Ireland has about 17,000 customers.

"The company considers the sale of the branch in Ireland to be a necessary step as we continue to refine our funding strategy and focus on our commercial objectives," said executive chairman Ron Sandler.

The purchase by Permanent TSB must be approved by the Minister for Finance. Northern Rock said it expects the deal to be completed by the end of the year, if approval is granted. Customer accounts will then be transferred to Permanent TSB, and holders are being informed in writing.

Staff are also expected to transfer to Permanent TSB.