Sunday 30 April 2017

RBS eyes recovery of share of Ulster Bank's £15bn bailout

Ulster Bank’s interim chief executive, Paul Stanley
Ulster Bank’s interim chief executive, Paul Stanley
Donal O'Donovan

Donal O'Donovan

Ulster Bank plans to begin repaying its £15bn (€19bn) bailout from parent RBS, after reporting a second year of profits, its interim chief executive said yesterday.

Operating profits at Ulster Bank fell by €244m last year to €362m, but it was still the bank's second year of profit since the crash.

The Irish bank reported a 65pc increase in new business lending to €1.5bn and a rise in mortgage drawdowns of 53pc to €700m for last year.

Mortgage lending was higher than expected last year despite the impact of restrictive lending rules introduced by the Central Bank, Ulster's interim chief executive, Paul Stanley said.

The bank does not expect radical change when those mortgage rules are reviewed later this year.

Lending to small and medium-sized businesses has picked up further so far in 2016 and the bank's net lending is expected to grow this year, Mr Stanley said.

An operational split of Ulster Bank's units north and south of the border is not a precursor to a spin-out of Ulster Bank's Republic of Ireland business, Mr Stanley said.

A priority instead is to gradually return capital to RBS, he said. The taxpayer-controlled UK parent pumped more than £15bn into the business in the wake of the financial crash.

Subject to regulatory approval the bank now plans to start returning cash to the parent, starting this year, he said.

Excess capital, in a period of negative returns, creates issues for the bank, Mr Stanley said.

Ulster Bank's 2015 income was €758m, up from €749m in 2014, while operating expenses were €590m compared to €523m.

"Expenses increased due to higher pension, litigation and regulatory costs and the impact of the weaker euro on the cost of services sourced from RBS," he said. RBS yesterday saw its shares plunge after reporting its eighth straight year of losses.

Irish Independent

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