Monday 18 February 2019

Ulster Bank buoyed by €280m capital injection from RBS

Parent digs deep as losses mount on €54bn Irish loan book

Ulster Bank headquarters in Belfast. Photo: Getty Images
Ulster Bank headquarters in Belfast. Photo: Getty Images

Joe Brennan

Ulster Bank has received a fresh €280m capital injection from its parent, Royal Bank of Scotland, as it looks to line its capital reserves against the impact of spiralling losses on bad loans.

The move comes only weeks after RBS pumped €300m into Ulster at the end of June, cushioning its balance sheet as the all-island lender posted a £500m (€567.2m) loss for the first half of the year, after writing off £641m of impaired loans.

The writeoffs largely relate to the £15bn property-dominated portion of the bank's £54bn Irish loan book, which has been bundled off into a separate, "non-core" division. It plans to either sell off, restructure or write off these loans over time.

Some £9bn of the loans moving into the new unit relate to Irish property developers, understood to include those to its most high-profile borrower, Sean Dunne, who the bank backed in the €379m purchase of the Jurys and Berkeley Court hotel sites.

Ulster Bank is in the process of seeking 250 more job cuts in addition to the 750 voluntary redundancies that it announced last January.

The initial cull, which received applications from a quarter of its 7,000-strong workforce, is part of the group scrapping its First Active brand, with the closure of 45 branches of the former building society and rebranding the remaining 10 under the bank's name.

Meanwhile, finance union IBOA is upping the ante as Ulster Bank presses ahead with plans to enforce a pay freeze, close its defined-benefit pension scheme to new members, and cap pension benefits for existing members.

The union is currently trying to get its members in the bank to sign up to a declaration to Ulster Bank management. It claims the bank's proposals are in breach of contractual entitlements of employees, the national wage agreement and the existing "trust deed" between the bank and trustees on the operation of pensions.

"Staff in Ulster Bank have faced enormous change over the last number of years -- unprecedented in our industry -- and it is extremely disappointing that the senior management, who have created the difficulties, . . . seem to be set on a path of scapegoating our members' terms and conditions of employment," according to the document.

The IBOA said that, instead, Ulster Bank should be "addressing the fundamental changes that need to take place at the top of the organisation".

Ulster Bank unions, including SIPTU, are due to meet with management today under the auspices of independent mediator Kieran Mulvey for a discussion on pay.

The meeting, which was agreed some time ago, is the first time both sides come face to face since the bank's announcement, last week, of a pay freeze.

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