Ulster Bank is set to remain a core element of the Royal Bank of Scotland group, despite the British government looking to begin the process of selling its majority share in the bank.
The British government has held talks with an Abu Dhabi-based sovereign wealth fund over a sale of a portion of its 82% stake in RBS. Stakes of anything up to 33% have been mentioned, although analysts here claim only around 10% is likely to be sold in the short-term. It has also been claimed that no sale is expected in the immediate future and that talks are not yet at an advanced stage.
Despite the British government’s long-term aim of exiting RBS, either by breaking even or at a small profit for its taxpayers, core assets — including Ulster Bank — are likely to remain in the group.
Eamonn Hughes of Goodbody Stockbrokers said: “With the UK government likely to hold on to a substantial stake in the bank over the medium term, irrespective of the outcome with the sovereign wealth fund, the status quo in control of ownership is likely to remain unchanged for Ulster Bank.
“Ultimately, the UK government will exit its full stake, but at that stage, one hopes that Ireland will already be on the mend, likely keeping Ulster exactly where it is now for any new owner.”
A spokesperson for the British treasury yesterday noted that the long-term aim for RBS is to be repaired to “full health” so it can support the British economy in the future.
“The Government’s policy has always been to return RBS to the private sector, but only when it delivers value for money for the taxpayer,” the spokesperson said.
Ulster Bank recently reported a near 40% increase in operating losses and a 19% rise in impairment charges to cover loan losses over the past year.
© Irish Examiner Ltd. All rights reserved