Sunday 8 December 2019

Bailouts of €7.2bn help keep foreign banks afloat

Joe Brennan

THREE foreign-owned banks that have been worst hit by the property market collapse have been bailed out to the tune of €7.2bn by their parents over the past two years.

Ulster Bank, Bank of Scotland (Ireland) and ACC Bank have each announced massive restructurings within the past 14 months, as they benefited from massive capital injections to shore up their balance sheets amid soaring bad loan losses.

UK government-controlled Royal Bank of Scotland pumped €3.3bn into Ulster Bank last year. Its loan losses for the last two years have topped €2.6bn, though over half of this relates to the troubled loan book it spun off in the middle of last year into a non-core unit, an internal 'bad bank' of sorts.

Bank of Scotland (Ireland) made a €750m cash call on its parent Lloyds Banking Group in December 2008 as the bank's loan impairment charge hit €553m.

It received an additional €2.7bn last year from Lloyds -- which is 43pc UK government-owned -- as loan losses spiralled to €3.3bn.

Meanwhile, ACC Bank has found that a €175m bailout from its Dutch owner Rabobank in 2008 was not enough.

It revealed last week that it required a €275m top-up last year as its bad loan provisions edged 2.4pc higher to €382m.

ACC has emerged as the most aggressive pursuer of troubled developers -- including Liam Carroll, Paddy Kelly and John Fleming -- through the courts. Last week, it succeeded in having the High Court appoint a liquidator to three insolvent companies belonging to the Cork-based Fleming building group.

Elsewhere, loss-making National Irish Bank has not had to go cap-in-hand to its Danish parent, as the bank operates as a branch, rather than a standalone subsidiary, of Danske Bank.

Belgium's KBC Bank Ireland stands alone among the main banks operating in this country to have remained profitable so far during the financial crisis.

Irish Independent

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