Government open to creating 'third force' in Irish market if Ulster Bank withdraws 

Tánaiste Leo Varadkar told the Dáil the Government was concerned about the impact the bank's withdrawal would have

The board of NatWest is to meet on Thursday evening to discuss a proposal to wind down Ulster Bank's operations here. Picture: Dan Linehan

The Government is open to creating a "third force" in the Irish banking sector if Ulster Bank withdraws from the market, the Dáil has been told.

Tánaiste Leo Varadkar told the Dáil that while the decision on closing the bank, which has operated in Ireland for 160 years, was a commercial one for its owner NatWest, the Government was concerned about the impact a withdrawal would have.

The board of NatWest is to meet on Thursday evening to discuss a proposal to wind down Ulster Bank's operations here.

Sinn Féin finance spokesman Pearse Doherty raised the issue at Leaders' Questions in the Dáil on Thursday, saying the removal of the bank from Ireland would be a "hammer blow" for staff and consumers.

"Ulster Bank plays a key role in our communities, providing jobs for over 2,400 people across the State and with 88 branches serving very important communities and more than one million customers. 

"It is a major player in our banking sector, responsible for 20% of all SME lending and with a 15% share in the mortgage market. In 2019 alone, it provided €3.1bn of new lending into our economy.

“The State remains a key player in the Irish banking sector, with a 14% stake in Bank of Ireland and a majority shareholding in both AIB and Permanent TSB.

“The Government must now look at how these pillar banks and Permanent TSB could play a lead role if the worst comes to pass tomorrow, offering some degree of security to mortgage holders, to businesses, to personal customers, and to workers.”

Mr Doherty said the idea of institutional investors getting access to the Ulster Bank loan book was unthinkable and asked the Tánaiste if he would look into creating a "third force" in the sector. This, he said, would stimulate competition and consumer choice.

The Tánaiste said this was something the Government supported.

"It is important to say that in any scenario, people's deposits and savings are fully protected and can be transferred to another bank. Two months' notice must be given to customers of any change or development such as this. When it comes to mortgages and loans, the terms and conditions will remain unchanged and EU consumer protections continue to apply.

In regard to the suggestion that we try to develop a third force in our banking sector that would be able to compete with Bank of Ireland and AIB, this is something that I and the Government support. 

"If it is possible to develop a solution on those lines, that is something we are exploring and want to explore."

Labour's Ged Nash called for the Government to act quickly to establish a third pillar bank.

Raised the imminent decision on Ulster Bank’s future in the Dáil.

Any sale or merger must see staff terms secured under TUPE.

With imagination govt can use its shares in existing banks to create a third force to support our recovery. ⁦@fsuireland⁩ https://t.co/nLf8Bz6sKn

— Ged Nash TD (@geraldnash) February 18, 2021

“Instead of allowing the assets of Ulster Bank and its customers to be flogged off to vulture funds and the long-standing business unpicked, there should be political intervention by the Minister to work towards the delivery of a real third force in Irish banking using the State-owned Permanent TSB to develop real competition to Bank of Ireland and AIB.

“Government must take a hands-on approach. The Minister for Finance has a pivotal role in this process as it reaches the end-game."

Solidarity TD Mick Barry, meanwhile, called for the bank to be nationalised.

"This bank made super profits for its UK overlords but now is set to shut its doors and damn the consequences for the mortgage holders and the workers. 

Mortgage holders must be protected from the vulture funds, the so-called overseas investment funds must not be allowed get their claws into any portion of this bank.

"The bank needs to be saved and run on a not-for-profit basis, saving jobs and the important services it provides to the community. This can only be done by nationalising the bank and putting in place a new board which serves the people, not big business interests."