The UK owner of ULSTER Bank spent two years considering exiting the Irish market before disclosing the possibility and informing the government and central bank of its plans in late 2020.
Documents submitted by NatWest to the Competition and Consumer Protection Commission (CCPC) show that Ulster’s parent bank found in 2018 that its Irish subsidiary was unable to generate the desired return.
By March 2019, the board of RBS – as NatWest was then known – had considered “a wide range of exit options” for Ulster Bank, including a wind-down of operations, but decided to continue a stabilization strategy under chief executive Jane Howard.
However, although regular internal discussions continued in Dublin and London on the future of the state’s third-largest bank, and the eventual decision to leave the company was made in June 2020, it was not until October 2020 that NatWest engaged with official stakeholders in Ireland.
By then, NatWest had admitted it was conducting a “strategic review” of its Irish operations. Following the completion of this review, the bank announced in February 2021 that it would be fully withdrawing from Ireland, selling portfolios of loans in the process.
The documents, including board minutes and notes from NatWest’s Executive Committee meetings, were summarized and excerpted in the CCPC’s Determination Report on AIB’s €4.2 billion acquisition of Ulster Bank commercial loans – part of NatWest’s exit plan.
They show a bank that is looking for the easiest way out of a market in which it has not been able to achieve a return in excess of the cost of capital for many years.
Over the course of several meetings between 2019 and 2021, senior NatWest figures weighed various exit options for Ulster Bank.
They examined mergers with at least two potential partners (who are not named in the report), a gradual exit from the Irish market, and a rapid liquidation of short-term loans, followed by a sale of the remaining assets to a financial buyer.
In June 2020, Ulster Bank abandoned its search for new Dublin headquarters, with Ms Howard citing remote working arrangements in response to Covid inquiries Irish Independent.
But that statement came just a week after NatWest’s executive committee concluded that Ulster Bank was unable to generate adequate returns and the board “recognized that resolution would… probably be most beneficial”.
However, that view had developed by October 2020, when NatWest agreed on its final plan to sell Ulster Bank’s bad loans to speed up the “repatriation” of capital from Ireland to the UK.
By December 2020, NatWest identified AIB as the preferred buyer for its corporate book and executed a managed exit plan as a backstop, according to the CCPC report.
The report only mentioned a “viable alternative” to AIB, but NatWest dismissed it because it was a finance buyer — likely a hedge fund or private equity firm — that lacked the capacity to serve clients.
https://www.independent.ie/business/irish/ulster-bank-was-marked-for-exit-two-years-before-natwest-review-41843543.html Ulster Bank was flagged for exit two years ahead of the NatWest review