Business Irish

Saturday 7 December 2019

Ulster Bank to make €1.5bn payment to parent company RBS

Gerry Mallon, Chief Executive of Ulster Bank. Photo: INM
Gerry Mallon, Chief Executive of Ulster Bank. Photo: INM

Gretchen Friemann

Ulster Bank will make a €1.5bn payment to its parent, Royal Bank of Scotland, next week making it the only Irish bank to pay out a second dividend payment since the crash.

The decision to pay the dividend underscores the strength of the regional lender’s recovery and points up the renewed health of the of bank lending market as employment levels and house prices continue to rise.

Post the pay-out, which was approved by the Central Bank and the ECB, Ulster Bank’s common equity tier one ratio (CET1) - a key measure of a bank’s financial strength - will  stand at over 22pc.  In a statement to the stock exchange this morning, the bank noted this is “significantly above regulatory capital minimums”.

Ulster Bank, which received a £15bn lifeline from its parent for both the Republic and the Northern Ireland operations in the wake of the financial crisis, said it will pay the money to NatWest Holdings Limited, a subsidiary of RBS.

The regional lender’s chief executive, Gerry Mallon said the dividend “represented another important milestone for Ulster Bank” and was further evidence of “our strong balance sheet and capital position”.

He added “we look forward to making further payments in future, with the permission of the regulator”.

Investec’s Owen Callan noted that Ulster Bank’s CET1 ratios were once as high as 30pc as the once stricken lender grappled with “a significant level” of non performing loans.

Ulster Bank was the first of the Irish lenders to pay a dividend, funnelling €1.5bn back to its parent at the end of 2016 - a move that capped a turbulent and controversial turnaround period.

Last year AIB issued its maiden payout since the crash while Bank of Ireland is expected to follow suit in the coming months.

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