Ulster Bank welcomes RBS announcement and says it’s ‘business as usual’
Royal Bank of Scotland (RBS), the parent bank of Ulster Bank, is to create an internal “bad bank” of almost €45bn worth of problem assets.
Ulster Bank have welcome the announcement, which was described as “good news” for Irish customers and that it’s business as usual.
“We welcome today's announcement regarding the outcome of the UK Government’s Good Bank Bad Bank Review which confirms Ulster Bank as a core business for RBS and acknowledges the importance of Ulster Bank to the whole island of Ireland.
“We will now work through the detail of how we will operate the "bad bank" and the structure required to support this.
“In the meantime, it is business as usual for our customers and we will communicate directly to any impacted customers.”
Ulster Bank will also be participating in a Group-wide review of the business to be complete in February 2014, the spokesperson added.
Earlier this morning, RBS announced its intention to create an internal bad bank for problem assets – but avoid a full split.
The announcement was made by the bnak and the British Treasury before markets opened the morning.
It means that Ulster Bank’s toxic assets will be ringfenced with its parent bank’s debts.
The move came after Chancellor for the Exchequer George Osborne opted not to split Ulster Bank from RBS.
The 81% state-owned lender revealed the outcome of a four-month review into its future as it said operating profits more than halved to £438 million (€517m) in the third quarter on a year earlier.
RBS avoided a threatened carve-up and nationalisation of its problem loans, and will instead run down the assets at a faster rate.
New chief executive Ross McEwan has also started a full review of the lender which will report back in February, and is to speed up the sale of its Citizens US banking subsidiary, with a partial flotation next year.
Mr McEwan said the plan will "create a bank that can reward the faith of UK taxpayers and all our investors".
Chancellor George Osborne said RBS's new focus will see it being a "boost to the British economy instead of a burden".
RBS will make a substantial loss this year as the faster run-down of assets in the internal bad bank will cause an accounting write-down of up to £4.5 billion.
And when including one-off items and an additional charge of £250 million to cover redress for the mis-selling of payment protection insurance (PPI), RBS made a bottom-line loss of £634 million in today's third quarter results.