‘Unwelcome news’ as Ulster Bank to begin phased withdrawal from Irish market

David Young, August Graham and Cate McCurry, PA
·5-min read

Ireland’s deputy premier said the decision by NatWest to withdraw Ulster Bank from the Irish market is “unwelcome news”.

NatWest said a review of its Irish bank found that it would not achieve an acceptable level of returns going forward.

Uncertainty now surrounds the bank’s 2,800 staff, although NatWest insists it will try to keep job losses to a minimum.

Tanaiste Leo Varadkar said it will be a gradual withdrawal over the next few years.

He added that there will be no compulsory redundancies this year and no branches will close.

“It is a commercial decision by its owner, NatWest, which is a British bank,” Mr Varadkar told RTE News At One.

“The Government, led by (Finance Minister) Paschal Donohoe, has been in discussions with NatWest about the way forward and those have been ongoing now for weeks.

“When it comes to deposits and savings, they will be fully protected and they can be transferred to another bank, and anyone has to get at least two months’ notice.

“There is ongoing engagement with AIB and (Permanent TSB) and other banks about the future. There are talks about the commercial loan book going to AIB.

“We are trying to work towards a future that at least mitigates against any harm to businesses.”

Two other Irish banks – Permanent TSB and AIB – have already made moves to potentially acquire Ulster Bank assets south of the border. The Irish Government is a majority stakeholder in both AIB and Permanent TSB.

The announcement came as NatWest revealed that it made a pre-tax operating loss of £351 million in 2020.

Permanent TSB and other banking interests are in talks with NatWest over the potential acquisition of Ulster Bank’s retail and SME assets, liabilities and operations.

NatWest has also signed a Memorandum of Understanding (MoU) with AIB over the purchase of Ulster Bank’s corporate and commercial loans.

Ireland’s Finance Minister Paschal Donohoe today spoke to the chairs of NatWest and Ulster Bank, as well as the governor of the Central Bank of Ireland Gabriel Makhlouf following the announcement.

Mr Donohoe said he also met with the representatives of the financial services union.

Speaking in a news briefing on Friday afternoon, Mr Donohoe said: “This is a very difficult day for the many employees of Ulster Bank all over the length and breadth of our country.

“I recognise that for many while it was known that this process was under way, and while it unfortunately was an expectation regarding its outcome, to have this confirmed today is a very difficult moment.

Alison Rose
Alison Rose, NatWest chief executive (Nick Ansell/PA)

“It is important to note in the announcement made today that NatWest have indicated their commitment to an orderly exit from Ireland over time, and they have made reference to the engagement they have with Allied Irish Bank and PTSB.

“They have made a statement regarding their preference for engaging with banking counterparties that provide a full array of retail services within the Irish banking sector.

“That refers to potential commercial transactions which still require a huge amount of work, negotiation and engagement and secondly, that work will be led by banks that are completely independent of the Government and me.”

He said during the meetings with NatWest and Ulster Bank, he emphasised the importance of clear and timely communication.

Paschal Donohoe
Minister for Finance Paschal Donohoe (Julien Behal/PA)

Mr Donohoe said it was a “difficult day” for Irish banking.

“There will be consequences of this exit that will be important for the future of the banking sector, and it will be important to reflect on the broad set of reasons that led to this exit,” he added.

Ulster Bank’s operations in Northern Ireland are unaffected by the announcement.

“Following an extensive review and despite the progress that has been made, it has become clear Ulster Bank will not be able to generate sustainable long-term returns for our shareholders,” said NatWest chief executive Alison Rose.

“As a result, we are to begin a phased withdrawal from the Republic of Ireland over the coming years which will be undertaken with careful consideration of the impact on customers and our colleagues.”

Ulster Bank’s chief executive in the Republic, Jane Howard, said that no branches will be closing this year.

“There’s never a good time to deliver news like this and I understand that it’s extremely disappointing news for both customers and colleagues,” she told RTE Morning Ireland.

“But now that the decision has been made, my focus and our focus will be on making sure that we complete this phased withdrawal over a number of years, in an orderly fashion, so that we do a good job for both customers and colleagues.

“What’s really important for today is there is no change right now, we’re continuing to offer a banking service, and no branches will be closing this year.

“(Customers) don’t need to take any action and we’ll be starting to communicate with our customers today.”

Ms Howard said she was reluctant to say how many years the phased withdrawal process would take.

“I think it’s unhelpful if I start speculating but it is going to be a number of years,” Ms Howard added.

“I think these things take time and we’ve seen that from the past.”