Wednesday 28 June 2017

RBS boss says Irish takeovers back on the agenda

‘The strategy is play to our strengths, so we’ll look at opportunities as well as the threats [from Brexit],’ says RBS boss Ross McEwan. Photo: Colin O’Riordan
‘The strategy is play to our strengths, so we’ll look at opportunities as well as the threats [from Brexit],’ says RBS boss Ross McEwan. Photo: Colin O’Riordan
Donal O'Donovan

Donal O'Donovan

Ulster Bank will get the green light to pursue takeovers next year, once the bank has shown its on a solid growth path, RBS chief executive Ross McEwan has told the Irish Independent.

And, with Deutsche bank rocked by a $14bn US fine for its role in the subprime mortgage crisis, the RBS boss says his bank, once also a major player in the sector, has been putting money aside to cope with any bills coming its way.

In an exclusive interview with this newspaper, Ross McEwan said he's open to Irish takeovers, but not buying in other people's problems.

"I've said to the team here: 'Lets clean up our own business first over the next 12 months and once you've proved to me that you've got a really good bank running here again I'm happy to look at assets that may fit'," he said.

"At the same time, I don't want to be buying in somebody else's problems. We've had those loans ourselves.

"I don't need them back again. I would like to grow the business here (in Ireland) but I'm not going to grow it at all costs," he insisted.

"So you've got to be very clear that when you go in you are getting the right assets otherwise you spend a lot of time with regrets, I don't plan to do that. So we are selective in what we look at, we are very clear in our strategy."

Even the idea of buying a bank is a radical turnaround for Ulster Bank, once seen as a possible candidate to exit the market here. The news puts rivals Permanent Tsb and KBC Ireland in the frame for potential tie-ups.

KBC in Brussels is due to decide on the future of its Irish unit later this year.

A senior source at the Central Bank said even a deal involving all three would be unlikely to cause regulatory concerns, given the dominance of AIB and Bank of Ireland.

Mr McEwan took the top job at RBS three year ago, and immediately ordered a review of Ulster Bank operations, prompting speculation he was looking to sell the Irish bank.

It didn't happen. Ulster Bank is a "core franchise", Mr McEwan says now.

After the crash a third of the £45bn cost of rescuing RBS ended up going to prop up the Irish unit.

Ulster Bank is back in profit but Mr McEwan is pessimistic about getting that money back.

"I think it'd take decades to get that amount of money out of a business this size and I think we should just move on and try to create a really good bank out of it so that it does create value long term for shareholders, and that's our objective."

On his bank's controversial sale of problem loans, Mr McEwan is adamant the lender has a right to claw back cash when borrowers don't repay.

At a global level, RBS faces its own potential US fines for its role in the pre crash mortgage market there.

The fine imposed by the US Department of Justice on Deutsche Bank has rattled investors.

"We've been very public about the fact that we've got to settle up the mortgage backed securities issues in the US. We have been building capital over time for these sort of events," Mr McEwan said.

The bank has been working with US authorities, he said.

"We've been very open with them in answering all their enquires and giving them all the information they've required," Mr McEwan added.

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