Ulster Bank signals buying any rival bank off agenda

Ulster Bank signals buying any rival bank off agenda

By Eamon Quinn

Ulster Bank has denied considering making approaches to buy out rival banks in the Republic, as the lender returns to financial health with the improving economy.

Long-standing speculation that Ulster would buy out rivals such as Permanent TSB had resurfaced on reports that regulators had discussed such an outcome earlier this year as a potential solution for Irish banks to clean up their loan books of soured home and buy-to-let mortgages.

But although a purchase of a rival by Ulster is not inconceivable the bank has signalled it is not on its agenda anytime soon.

Chief financial officer Paul Stanley said that the speculation of Ulster acquiring a rival bank surfaced at regular intervals and there had been no conversations in recent times.

“Are we talking to anyone at this point of time? No,” said Mr Stanley. “We have quite enough on our plate to be doing at the moment,” he said.

Mr Stanley has helped run the bank since the surprise announcement this year of the departure of chief executive Gerry Mallon to head up Tesco Bank in Britain.

He was speaking after Ulster Bank in the Republic posted earnings showing operating profit had climbed to €100m in the six months to the end of June, boosted by a rise of over 4% in total income to €355m, and by a 16.7% drop in operating expenses to €285m.

Like other banks, Ulster wrote back previous impairment charges. Its net impairment release rose to €30m in the period from €13m a year earlier, driven by the continued improvement of the economy and the rising quality of the loan books.

Mr Stanley said its plan, which it first announced in May, to sell around 6,500 residential and buy-to-let non-performing mortgage loans (NPLs) may be pared back slightly to €1.5bn.

A shortlist of bidders has been drawn up and the sale to an equity fund will be completed before the end of the year.

Following the sale, the value of the bank’s non-performing loans will fall to around €2.5bn, and the bank will be well placed by the end of the year to assess whether to launch a further sale of some but not all of the remaining NPLs, possibly some time next year.

But Mr Stanley said for the remaining mortgage customers in deep arrears, the bank would again assess the loans in terms of solutions and “whether there is more we can do in particular instances of keeping people in their homes”.

“At that point, we will then consider whether it is appropriate or not to have another sale”, after a large part of the political uncertainty at the start of the year about the sale of NPLs by banks had been clarified, he said.

Mr Stanley said its deep cuts last month in its fixed-rate mortgage rates were “consistent” with preserving its market share of new home lending, after seeing some slippage in the share earlier this year.

RBS said it had left unchanged in the latest quarter the amount of €297m set aside for Ulster’s part in the industry-wide tracker mortgage scandal.

Ulster is investing in its 88 branches and its online banking and has no immediate plans for the branch network, said Mr Stanley.

Owen Callan at Investec said the results showed “genuine progress” by Ulster Bank, although its cuts to its fixed-rate mortgages reflected “increasing competitive pressures”.

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