Talks on takeover of Ulster Bank start

Royal Bank of Scotland chief executive Ross McEwan has confirmed that there have been negotiations with private equity firms over a possible takeover of Ulster Bank.

Asked if it could attract private equity investment, Mr McEwan said: “It’s one of the options we’re exploring. I know there’s been a lot of speculation on that, and it’s interesting how many people want to buy into Ireland at the moment.”

The Irish Examiner reported on Wednesday that one of the options that RBS is considering is a management-supported private equity takeover of Ulster Bank.

KKR and Apollo are among the private equity firms interested in the deal, which would leave the current management team, led by chief executive Jim Brown, in place.

However, the success of these negotiations hinged on RBS taking over some of Ulster Bank’s distressed assets and providing an indemnity against future losses.

This is just one of a number of options being looked at by RBS. It is unlikely that anything will be finalised before the results of the ECB stress tests in October.

“Right now we’re doing a lot of work inside Ulster to see what opportunities we’ve got, and how that business can position itself.

“That’s going reasonably well and we’ll be talking more about that probably in the next two or three months,” said Mr McEwan.

Mr McEwan also said that RBS would look at Ulster Bank remaining in the group.

There has been a considerable improvement in the performance of Ulster Bank over the course of this year, which means that would be a lucrative play on a recovering Irish economy.

One market source said that if Ulster Bank continues to increase its profitability then it would most likely remain part of RBS on the basis that it has had to pump £15bn (€18bn) into its Irish subsidiary over the past five years to cover losses and will seek to recoup as much of its investment as possible.

Additional reporting: Reuters