Problem loans gone Ulster says as sale of parent nears
The sell-off of Ulster Bank's stock of boom-era problem loans "has materially concluded", the bank said yesterday.
Ulster Bank's internal bad-bank RBS Capital Resolution (RCR) has been among the big sellers of portfolios of "non-core" and impaired loans first issued before the property crash in 2008.
"RCR has materially concluded its work in Ireland ahead of time. Since its establishment in 2014, net assets have reduced from £4.8bn (€6.85bn) to £1bn, as of 30 June 2015, with a further reduction of £0.5bn expected to complete in Q3 following the announcements earlier this month," Ulster Bank's Jim Brown said yesterday.
He was speaking after financial results from Ulster Bank's UK parent Royal Bank of Scotland moved closer after profits, including at the Irish unit, rose in the first half of the year.
Ulster Bank reported operating profits of £131m (€178m) for the first half of the year, well ahead of the £55m (€67m) in the same period of 2014, the bank said yesterday. The results show the bulk of profits were earned in the three months to the end of June.
In London the Irish bank's state-controlled parent RBS reported a profit of £293m or the second quarter, up 27pc on the year before, as economic recovery at home enabled it to recover loans that had been written off. Analysts had expected a loss of £260m, according to forecasts provided by RBS.
The results boosted RBS shares ahead of an impending first sale of a chunk of the British government's shares.
RBS was rescued by the UK government with £45.8bn of taxpayers' money, about a third of which ended up in Ulster Bank.
Ulster Bank said the results were boosted by an increase in operating profits, lower costs and lower impairment charges came against a backdrop of a weaker euro.
UK Finance Minister George Osborne said earlier this month the Treasury planned to sell at least three-quarters of its 78pc RBS stake over the next five years and he was keen to kick off the process as soon as possible.
An initial sale to financial institutions, which will be at a loss on the average 502p per share price the government originally paid, is possible in the next few days, but more likely in September, sources familiar with government thinking said.
"The bank is in much better shape than it was even 12 months ago and it's given the government the confidence to say this is a bank that we can start selling off. The timing itself is up to the government," RBS Group chief executive Ross McEwan told reporters.
A spin-out of UK lender Williams & Glyn is continuing on schedule, with a stock market flotation on the cards for next year, he said.
Ulster Bank's Jim Brown is due to move to the UK to take over as Williams & Glyn ceo to lead the spin-off.
RBS said it planned to return capital to shareholders by paying dividends or buying back shares, but would not be in a position to do so until the first quarter of 2017 at the earliest. "We felt it was important to be transparent and to ground people in what we think is a realistic expectation," finance director Ewen Stevenson said.
(Additional reporting Reuters)