No clear route for merger to create third banking

The speculated Ulster Bank/Permanent TSB merger that would create a third banking force in the domestic market faces many challenges before it becomes a realistic proposition.

The Sunday Times reported over the weekend that Royal Bank of Scotland chief executive, Ross McEwan, was looking at a possible tie-up between Ulster Bank and another Irish-based bank. KBC and Danske Bank were both cited in the piece, although analysts have dismissed both of these as non-runners.

If Ulster Bank does go down the merger route to bolster its position in the Irish market, then PTSB would be the most obvious candidate. However, the future of the 99.2% State-owned bank hinges on the acceptance of its restructuring plan which is currently before the European Commission.