Sunday 21 January 2018

Government rejects any Ulster Bank takeover

British plan to swap it for NAMA's assets in UK gets cool response

Ulster Bank's Dublin headquarters
Ulster Bank's Dublin headquarters
Donal O'Donovan

Donal O'Donovan

THE Government says it has not been approached about taking over Ulster Bank, the biggest Irish bank in which the State is not already a shareholder.

The BBC reported yesterday that officials at the UK Treasury were considering a scheme whereby Royal Bank of Scotland (RBS) – in which the British state has a majority stake –would sell some or all of Ulster Bank to the Irish Government.

In exchange, Ireland would hand the UK government loan assets currently held by NAMA and which are secured on British property.

However, officials in Dublin quickly moved to shoot down speculation that the plan could come to fruition.

"No approach has been made about Ulster Bank and a takeover of the bank is not being considered," said a spokesman for the Department of Finance said.

Separately, a source in Dublin described the UK proposals as "pie in the sky stuff" and noted that the Irish Government would be unlikely to pursue any option that would increase its holding of Irish property loans.

Ulster Bank said it would not comment on the speculation but noted that the bank was "a core part of the RBS Group and continues to make significant progress".

The idea for the potential swap of nationalised bank assets between the UK and Ireland emerged as one of a number of proposals about the future of its parent RBS.

The possible deal on Ulster Bank emerged as one of a number of proposals on how the UK government can get the best recovery from its rescue of RBS.

The option of splitting the entire RBS Group into a "good bank and bad bank" will be put forward by UK parliamentarians as part of a wider review of standards in British banking.

The UK's Parliamentary Commission on Banking Standards is likely to set out the possibility of splitting up the bank when it reports to the UK Treasury on the future of RBS later this month.

The commission is made up of MPs and members of the House of Lords, including the current Archbishop of Canterbury and the former Chancellor of the Exchequer, Nigel Lawson.

It was set up last year following the scandal over manipulation of interbank lending rates by big UK banks.

The hope would be that formally splitting RBS into a 'good bank' and a 'bad bank' would encourage the former to lend more freely to businesses and consumers.

However, UK Chancellor George Osborne has said that he would think twice about breaking up RBS because of the expense involved and the complexity of doing so.

A separate, cross-party select committee in Parliament has recommended that the Treasury should examine a possible break-up of the RBS Group and produce a cost-benefit analysis. The Treasury has yet to respond to that request.

DEAL

The UK government pumped in £45.8bn (€53.6bn) in 2008 in order to keep RBS afloat, leaving taxpayers holding an 81pc stake in the bank.

The idea of RBS getting rid of Ulster Bank through a deal with the Government here was not part of either review. It has emerged separately from within the Treasury itself, according to the BBC.

Even if the Irish Government was prepared to go along with such a scheme, it would be likely to meet strong push back in Northern Ireland from unionist politicians, who would not want to see the Government in Dublin take control of yet another of the North's biggest lenders. (Additional reporting, Reuters)

Irish Independent

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