Lone Star speculation strengthens expectation of Ulster Bank departure 

Lone Star is understood to be working with advisers to study a bid for the  banks assets, which analysts say 'adds to the growing speculation that wind-down is looking more and more like the most likely option'

A decision on Ulster Bank's future in the Republic is expected to be made by owner NatWest later this month.

Lone Star is understood to be among private equity firms lining up for all or parts of Ulster Bank’s business in the Republic, heightening expectation of Ulster’s exit from the retail banking market here.

Lone Star is understood to be working with advisers to study a bid for the assets. Ulster controls a loan book of about €21bn.

Parent NatWest said last year it was considering “strategic options” for Ulster Bank.

“Our strategy for [the] Ulster Bank business in the Republic of Ireland remains unchanged,” NatWest said late last week. 

“We continue to evaluate the impact of Covid-19 and the challenges to the economy and we are reviewing our strategy appropriately and responsibly in light of these events.” 

While previous reviews of Ulster’s future have ended without any change, there’s a growing sense the bank may opt to exit, albeit over a number of years, this time.

NatWest is expected to update on its strategic review of Ulster Bank when it publishes annual financial results on February 19, if not sooner.

Ulster Bank chief executive Jane Howard gave no reassurances over the lender's future at a meeting with the Financial Services Union last week.

Other private equity firms are also likely to explore bids, with Cerberus previously being linked to buying the loans.

A carve-up of Ulster’s mortgage and SME loan book assets among the domestic Irish banks has also been suggested. Permanent TSB has been mentioned as a potential buyer of Ulster Bank’s SME loan book.

Goodbody analysts said the latest reported interest “probably adds to the growing speculation that wind-down is looking more and more like the most likely option”.

Ulster Bank’s chief executive Jane Howard last week gave no reassurances over the lender’s future and the uncertainty for its customers and more than 2,800 employees when meeting with the Financial Services Union.

• Bloomberg and Irish Examiner