Business Irish

Thursday 18 October 2018

Ulster Bank boss denies lender 'in shop window'

Ulster is likely to take longer than its Irish peers to clean up its balance sheet and meet the ECB’s target bad-debt ratio of 5pc. Photo: PA
Ulster is likely to take longer than its Irish peers to clean up its balance sheet and meet the ECB’s target bad-debt ratio of 5pc. Photo: PA

Gretchen Friemann

Ulster Bank's interim chief executive insisted RBS has no plans to jettison the business and denied a looming €1.6bn loan portfolio sale of soured owner-occupier and buy-to-let mortgages is part of a wider strategy to prepare the lender "for the shop window".

Appearing before the Joint Oireachtas Committee on Finance yesterday, Paul Stanley said Ross McEwan, RBS's boss, had given a commitment to him that the UK banking giant has no plans to quit Ireland and stressed Ulster is viewed as a "core" part of the group.

Mr Stanley also hosed down fears the incoming head of Ulster Bank, Jane Howard, a senior official at RBS who has spearheaded the closure of over a quarter of the Edinburgh-based bank's branches, will follow a similar vein in Ireland and ultimately oversee the disposal of the Irish business.

While the bailed-out UK bank reaffirmed its commitment to Ulster as far back as 2014, Fine Gael Senator Kieran O'Donnell claimed rumours persisted about a possible sale and he questioned whether the reduction of non-performing loans was all part of an exercise to "ready the bank for the shop window".

But Mr Stanley said RBS wants to see the bank grow. "That is the challenge that they put to me every day," he said.

Ulster is likely to take longer than its Irish peers to clean up its balance sheet and meet the ECB's target bad-debt ratio of 5pc. A mass home loan sale of 6,500 troubled mortgages, which was launched last month and is likely to be completed by the end of the year, will cut its non-performing loans to 11pc of the total loan book from the current level of 17pc.

Mr Stanley acknowledged the bank still has some distance before it can claim to have cast off the legacy of the crisis. He estimated it will take until 2020 for the bad debt pile to reduce to EU norms.

Asked why the bank refused to write-off bad debts for struggling home owners but was willing to do so for vulture funds, who will snap up the loans for a fraction of their value, Mr Stanley argued the lender must avoid "moral hazard". He claimed the bank had decided not to make value judgments and countered that it was "unfair" for some customers to receive a reprieve and not others.

Ulster has earmarked 3,600 owner-occupier mortgages that have fallen into deep arrears, for sale alongside 2,900 toxic buy-to-let loans, although the bank said the portfolio size may shrink if borrowers are able to enter into "sustainable" forbearance measures.

The lender also came under fire for dragging its heels on the tracker mortgage debacle.

Mr Stanley said 3,490 affected customers will receive compensation and redress by July.

However the bank may take until early next year to tackle an additional 2,000 impacted borrowers.

Irish Independent

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