By Scott Wright
THE owner of Royal Bank of Scotland has taken a major step forward in its plan to withdraw its Ulster Bank operation from the Republic of Ireland.
NatWest Group confirmed to the City that it has entered into a binding agreement to sell around €4.2 billion of gross performing commercial loans to Allied Irish Banks.
Allied will also acquire “associated undrawn exposures” of about €2.8bn in a deal which covers the majority of Ulster Bank’s commercial lending book.
The sale will also result in around 280 members of staff transferring from Ulster Bank to AIB. Ulster Bank has 88 branches and 2,600 staff in the Republic of Ireland.
Talks with banking counter-parties are understood to be continuing with regard to the rest of the Ulster Bank business in the country.
The long-anticipated loans sale comes after NatWest revealed its intention to withdraw Ulster Bank from the Republic of Ireland in February.
READ MORE: Royal owner in loss as chief Rose quizzed on HQ
Chief executive Alison Rose said then that following an “extensive review… it has become clear that Ulster Bank will not be able to generate sustainable long-term returns for our shareholders.”
Mr Rose added in the bank’s results statement for 2020: “As a result, we are to begin a phased withdrawal from the Republic of Ireland over the coming years which will be undertaken with careful consideration of the impact on customers and our colleagues.”
Speaking to reporters later the same day, Ms Rose said there would be no “compulsory departures” in the Republic of Ireland this year, adding that the decision would not affect Ulster Bank in Northern Ireland.
The bank reaffirmed yesterday that it would not close any Ulster Bank branches this year on the back of the withdrawal in the Republic of Ireland.
AIB’s interest in the tranche of Ulster Bank’s commercial loans was confirmed on the day NatWest first unveiled its plans. The Edinburgh-headquartered bank, which changed its corporate name to NatWest from Royal Bank of Scotland in late 2020, said then that it it had opened talks with prospective suitors for parts of Ulster Bank. It also noted then that it had signed a non-binding memorandum of understanding with AIB, which had shown interest in a €4bn portfolio of “performing commercial loans”.
READ MORE: New Glasgow hotel reaches full height as £100m regeneration project gathers pace
In a statement to the stock market yesterday, NatWest said that it expects to recognise a small gain on disposal, which was based on the net carrying value of the lending on December 31, 2020. It added that the exact impacts of disposal will depend on movements in the book between now and the transfer, the timing of which is uncertain. The number of staff transferring to AIB will be finalised when the deal completes.
Ms Rose said yesterday: “In line with our strategy of a phased withdrawal from the Republic of Ireland, I am pleased that we have now reached agreement with AIB on the sale of the majority of Ulster Bank’s performing commercial lending portfolio. Our priority remains to support our customers and colleagues through this period.”
The deal underlines the gradual retrenchment that has been evident at NatWest since its bailout at the height of the 2008-2009 financial crisis.
In April, NatWest offloaded part of its Adam & Company banking operation, including the brand name – two months after speculation first emerged that the bank was exploring a sale. Canaccord Genuity Group acquired the investment management business of Adam & Co in a cash deal worth £54 million. The deal did not include Adam &Co’s banking and lending business.
Under Ms Rose, who took over as chief executive from Ross McEwan in November 2019, the bank has also been downsizing NatWest Markets, its investment banking operation.
Assets such as US bank Citizens and Worldpay were sold by the bank as it repaired its balance sheet in the aftermath of the financial crisis.
Shares closed. down 3.9p at 203.8p.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereLast Updated:
Report this comment Cancel