Photographer: Patrick Bolger / Bloomberg
Photographer: Patrick Bolger / Bloomberg
NatWest Group Plc will close Ulster Bank in the south of Ireland, disappearing after more than 150 years and putting at risk as many as 2,800 jobs.
NatWest will end the business in the coming years, the company said Friday, ending months of profitability that came from a strategic review of the lender last year.
“Despite the significant progress made in recent years, the Ulster Bank in the Republic of Ireland will not be able to achieve an adequate level of sustainable returns,” said Natwest. They said the move will be “accretive capital over the ioma-one year process. ”
Ulster Bank has struggled largely to help fund the Irish property bubble more than a decade ago, resulting in a $ 20 billion bailout from the Royal Bank of Scotland. Scotland, which was itself nationalized by the British state. Since then, there have been technological problems and he is involved in a wider mortgage scandal.
The closure of Ulster is likely to spur a race to buy its assets, with Lone Star Fund and Cerberus Capital Management LP among the potential contenders. The Irish government is also examining the creation of a third force in banking, with one opportunity focused on strengthening TSB Permanent Holdings Group Plc to compete with AIB Group Plc and the Irish Banking Group. -Ireland Plc.
Loan sales
PTSB said it is in early talks with NatWest about some loans. AIB is in talks about buying 4 billion euros ($ 4.8 billion) of Ulster business loans, and the transfer of some related jobs to those funds.
These moves mark a “potentially significant development for the Irish banking sector,” said Finance Minister Paschal Donohoe, warning that “much work remains to be done in the coming months. ”
Based in Belfast, Ulster opened a branch of Dublin in the 1860s and now controls around 15% of the Irish mortgage market. Its total loan volume amounts to approximately 20.5 billion euros, with approximately the same amount of investments.
The future of Ulster Bank has been an open question since the 2008 financial crisis with ongoing CEOs reviewing options for the bank. In 2015, RBS, which has changed its name to NatWest, consider selling the lender.
The pandemic is probably the last straw for NatWest CEO Alison Rose. The department reported an operating loss of 276 million euros in the first half of last year after being sued in anticipation of recall debts.
The unit cost-to-revenue ratio is around 98%, compared to around 64% for NatWest as a whole, and allowing Rose to use capital could be more profitable. elsewhere. Irish retail banks need to hold around three times as much capital for the higher risk seen in their mortgage lending compared to average requirements in Europe, a trade group said this week.
Loan sales
The Ulster loan book is likely to be shared among various players. Loved by international players Cerberus has been flooding into Ireland since the financial crisis, buying a number of non-performing loans at discounts.
Some want to use the Ulster process to support such local banks PTSB, a less dangerous outcome in politics.
“Rather than allowing the assets of Ulster Bank and its customers to be transferred to vulture funds, there should be political intervention to work towards the delivery of a third force in Irish banking. use of Permanent TSB, ”said Ged Nash, Labour’s anti-Irish lawyer. “The Government needs to take a hands-on approach.”
(Add details of loan sales speeches in the sixth paragraph)