Thursday 22 August 2019

Ulster Bank aiming to half its bad loans by 2020

Photo: PA
Photo: PA
Ellie Donnelly

Ellie Donnelly

Ulster Bank aims to reduce its bad loans to 5pc of its portfolio from 10pc by next year.

This is still higher than the average non-performing loan (NPL) ratio of 3.5pc across European banks.

In order to meet this target, between €900m - €1bn in NPLs will have to either be sold or cured, Paul Stanley, chief financial officer of Ulster Bank, told an Oireachtas Finance Committee.

Responding to questions from Sinn Féin TD Pearse Doherty, Mr Stanley agreed that at least 3,600 NPLs would need to be cured or sold to reach the 5pc ratio.

The bank plans to sell another portfolio of NPLs in the latter half of this year, most of which will be owner-occupier property, Mr Stanley said.

It will not know what loans make up the sale until the summer.

Ulster Bank has put aside funds to cover a potential fine from the Central Bank in respect of the tracker mortgage issue, however Mr Stanley refused to disclose the amount.

To-date the bank has set aside a total of €297m in respect of the scandal, in which thousands of mortgage customers were denied a tracker interest rate on their mortgage which they were entitled to.

Of this, €150m relates to operational costs, €120m has been paid out in compensation and redress, and around €20m will be paid out.

“There is a level of provision for fines, but we are not disclosing that,” Mr Stanley said.

Deputy Doherty said the bank had left a “tiny” amount for a provision for a fine from the Central Bank.

Ulster Bank said the European Central Bank was not putting it under pressure to reduce its NPLs.

“I won’t say that the EBC is putting direct pressure on us to reduce our NPLs,” Jane Howard, CEO of Ulster Bank, said.

“We want to be in or around 5pc next year. We can’t be clear on what loans will be in further sale until we have contacted all [potential] impacted customers.”

Ms Howard, who moved to Ireland from the UK, said she had not found a “rotten culture” in the banks here.

Online Editors

Also in Business