Ulster Bank still ‘a core element of RBS’

The uncertainty over Ulster Bank’s future has come to an end, with parent group Royal Bank of Scotland confirming that the subsidiary remains a core element of its overall business.

RBS was reportedly considering a number of options for Ulster Bank’s future, including a management-supported private equity takeover of the bank.

“We have a good market position and believe that, with investment, Ulster Bank can deliver attractive shareholder returns in the future,” RBS chief executive Ross McEwan said yesterday at the close of the group’s year-long strategic review of its Irish operations.

He added that Ulster offers “a good strategic fit” with RBS’s retail and commercial banking strategy, but admitted the group still has “a long list” of conduct and litigation issues to deal with and “much, much more to do to restore our customers’ trust in us”.

Jim Brown, Ulster Bank’s chief executive, said that the business will continue to progress its strategy on becoming the best bank for customer service on the island of Ireland.

“We will continue with our dual strategy of building a challenger bank in the Republic and strengthen our market-leading position in Northern Ireland as we progress closer alignment with RBS in Britain,” he said.

Mr Brown added that Ulster Bank will increase lending volumes across its retail, SME, and corporate banking channels.

New lending is up by 33% on an annualised basis in the year to date, with corporate lending ahead by 38%.

New figures yesterday showed that Ulster Bank generated an adjusted operating profit of £394m (€485m) for the third quarter of 2014, its third consecutive quarter of profitability.

The bank has seen 18 straight months of mortgage arrears improvements and now has 8,000 fewer homeloan customers in arrears than was the case at its peak a year and a half ago.

Ulster Bank said trading conditions improved in the third quarter due to Ireland’s GDP growth, lower unemployment levels, and property value recovery. However, it said the business environment remains challenging, despite seeing an increase in demand for new lending across all channels.

Ulster Bank’s latest figures also show an impairment release of £318m for the last quarter, up from a provision of £204m for the same period last year.

Finance workers’ union the IBOA welcomed yesterday’s news, but urged management to maximise employment and maintain a strong branch network across the island.

The bank said it will review its branch network on the basis of customer engagement. Around 55% of customer transactions are currently taking place online or digitally.


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