Thursday 24 August 2017

Ulster Bank not on the block despite report of fresh review

Gerry Mallon new ceo of Ulster Bank in the Republic
Gerry Mallon new ceo of Ulster Bank in the Republic
Donal O'Donovan

Donal O'Donovan

Ulster Bank is not being put back on the sale block by its UK taxpayer-owned parent, the Irish Independent understands.

That is despite a report carried on the highly regarded Bloomberg newswire that Royal Bank of Scotland's chief executive Ross McEwan plans to revisit the question of whether to sell his bank's unit in the Republic as early as next year.

Mr McEwan plans to look at options for the Irish consumer division within the next two years, Bloomberg reported citing an unnamed source.

However, a spokeswoman for RBS said that the bank's strategy for Ulster Bank "remains unchanged".

"We decided following an extensive strategic review last year that" Ulster Bank "was a core part of RBS and we are now pushing ahead with our strategy to create a strong challenger bank focused on our customers in the Republic of Ireland," she said.

RBS spent much of 2014 considering options for Ulster Bank including trying to find a private equity or trade buyer for some or all of the business.

In the end it plumbed to keep the Irish bank as a wholly owned unit in order to recoup capital as it returns to profit.

At the same time a decision was taken to deepen the split between Ulster Bank's operations on each side of the Irish border.

The Northern Ireland business is being integrated into RBS in Britain, while operations south of the border are increasingly stand-alone.

In theory that will make the Republic of Ireland business easier to dispose of down the line, if that option does come back into play.

Political considerations in Britain would have made any effort by State-owned RBS to walk away from Ulster Bank in Northern Ireland highly contentious.

In recent weeks Ulster Bank appointed Gerry Mallon as chief executive officer (CEO) for the Republic of Ireland only.

Previous Ulster Bank CEOs, including most recently Jim Brown, were responsible for the bank's operations in both the Republic and in Northern Ireland, although the bank has long been overseen by two separate boards.

A second upshot of the 2014 Ulster Bank review was a decision to speed up the pace of disposals of non-core and problem loans that were hived off into an internal bad bank.

Ulster Bank is now coming to the end of the asset sales. Assets in the unit, net of impairment provisions, had fallen to £500m (€690m) in September from £4.8 billion pounds in January 2014.

A significant share of the remaining loans have been packaged together in a portfolio dubbed Project Clear.

The portfolio is made up mainly of residential development land in Dublin and has attracted intense interest.

Three bidders, Cairn Homes, Michael O'Flynn and Lone Star, were short-listed as potential buyers, with the successful bid expected to be formalised this week.

Ulster Bank along with KBC Bank Ireland, a key rival in the retail banking space, were among the internationally owned lenders not to quit Ireland in the wake of the financial and property crash.

Despite massive losses on boom-era lending both banks remain active in the market here.

KBC is expected to be the last of the main lenders in the market here to return to profit, probably next year.

Its Belgian owners have said they will examine options for the Irish unit - potentially including a sale - at that point.

Irish Independent

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