NatWest, the owner of subsidiary Ulster Bank which operates in Ireland, has confirmed it is withdrawing from the Republic of Ireland following a review which found that it would not be able to “generate sustainable long-term returns” for its shareholders.
The bank has struggled on profitability for a number of years. Pre-tax profits dropped dramatically between 2015 and 2016, it also made a loss in 2017, and the figures have not substantially bounced back since.
The bank has not committed to a specific timetable for the rollback, but said it would proceed “over the coming years”.
Ulster Bank is Ireland’s third largest commercial bank and accounts for 15% of Irish mortgages and almost 20% of SME business lending. With its departure, Ireland’s big two banks – Allied Irish Banks (AIB) and Bank of Ireland – are likely to become even more dominant. In 2019, AIB had gross total loans of $92.8bn, Bank of Ireland $70.6bn and Ulster $30.4bn.
Prior to the financial crisis Ireland had seven major banking brands. Now just three (excluding Ulster) remain – AIB, Bank of Ireland and smaller bank, Permanent TSB. Mario Draghi, former president of the European Central Bank, remarked in 2018 that Irish banking was a “quasi-monopoly”.
NatWest has already confirmed it has signed a memorandum of understanding with AIB about a potential sale of a €4bn commercial loan portfolio. It is also reported to be in early talks with Permanent TSB, as well as other potential buyers, regarding other parts of the business.
