Ulster Bank will stay – but staff facing job losses and cost-cutting in new year
ULSTER Bank will stay in Ireland – but a new six-month review means cost-cutting, and further job losses.
The decision not to hive all of Ulster Bank into a so-called 'bad bank' is a boost to hundreds of thousands of customers, as well as 5,800 staff at the bank.
It came as State-owned Permanent TSB promised to boost lending.
The news from the two banks put a positive gloss on seven gloomy days of bad banking news which had seen the high-profile departures of two of the country's remaining lenders, Danske Bank and ACC Bank.
There was a broad welcome after Royal Bank of Scotland (RBS), the British owner of Ulster Bank, confirmed the Irish unit as a "core business" of the parent bank.
It came after the British government opted not to go ahead with a radical break-up of 81pc-State-owned RBS following a review by investment bank Rothschild.
Around €10.5bn of Ulster Bank's loans will be hived into a so-called 'bad bank' at RBS, a kind of internal NAMA, following the review, however.
But the wider decision will end speculation that Ulster Bank itself could have all been marked for inclusion in the 'bad bank', which would have meant a gradual closure of the third biggest Irish lender.
Management at Ulster Bank welcomed the news yesterday.
"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," a statement said.
It means "business as usual for our customers", the bank said, though the statement also said Ulster Bank will be getting in touch directly with customers whose loans are heading into the bad bank.
However, insiders warned, the decision does not mean Ulster Bank is out of the woods yet.
"There is still a tough road ahead," one senior figure at the bank told the Irish Independent.
Even after the main questions over its future have been settled, the changes could include further cuts to the bank's 5,800 staff, as well as additional branch closures.
Those cuts could be on the cards after head of RBS Ross McEwan said Ulster Bank will be participating in a group-wide review of the business, to be complete in February 2014.
Insiders say that review is likely to include a hard look at costs, where Ulster Bank is understood to be less efficient euro for euro than some of its peers in Ireland which have experienced dramatic cost-cutting measures in recent years.
Meanwhile, State-owned Permanent TSB has announced its latest plans to step up lending.
Controversially, the new push includes a ramp-up in so-called "top-up mortgages", aimed at people who are planning home improvements, to take advantage of tax breaks announced in Budget 2014.
Permanent TSB said it is making up to €100m available for home improvement loans, available either as personal loans or as additional mortgage debt. Bank of Ireland announced a similar initiative earlier in the week.
The Irish bank also signalled plans to shift more of its focus to small businesses.