The Minister for Public Expenditure and Reform has said the withdrawal of Ulster Bank from the Republic of Ireland is a “serious blow” for the Irish banking landscape, as well as the bank’s staff and customers.
Ulster Bank is to begin a phased withdrawal from the Republic of Ireland after more than 160 years in the market, its parent company NatWest confirmed earlier today.
“While Ulster Bank’s withdrawal is going to be gradual and phased, this is nonetheless a deeply disappointing decision by the NatWest group which will have significant consequences given the size of Ulster Bank’s presence in the Irish banking market,” Minister Michael McGrath said of the news.
“The immediate priorities now are to ensure the staff are treated fairly and that the interests of their customers are protected,” he continued.
The withdrawal of Ulster Bank is a v serious blow for staff, customers & competition in the banking sector. Staff must be treated fairly & customers protected. The engagement with other banks is welcome. Useful FAQs here 4 customers 👇https://t.co/IKycf49IW3— Michael McGrath (@mmcgrathtd) February 19, 2021
He said customers should not panic and should instead take advice before making any decision about products they currently have with the bank.
“Tracker mortgage customers, for example, who wish to keep their existing tracker product need to be particularly careful about switching their mortgage to another provider as this will almost certainly result in them losing their tracker.
“On the other hand, if their mortgage is sold, the existing terms and conditions – including the tracker rate – transfer across.
“Customers should consider their options carefully, and there is no pressure on them in the short-term to do anything,” he said.
Mr McGrath said he will work closely with Finance Minister Paschal Donohoe and other colleagues across government to manage the fallout from this decision by NatWest.
Explaining the decision today, 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.
Ulster Bank's operations in Northern Ireland are unaffected by the announcement.
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.
"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.
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.
Minister Paschal Donohoe welcomed these developments.
"I also welcome the announcement regarding Ulster Bank staff which outlines that some staff will transfer to AIB in line with the MoU that has been agreed with that bank.
"The commitment to engage with staff to minimise the impact on them is also to be welcomed,” he said.
"The Irish banking landscape will be poorer for the loss of Ulster Bank after all these years but we will focus now on the future and what can be done to support and strengthen a competitive and stable Irish banking system for the future,” he added.
Sinn Féin TD for Cork North Central, Thomas Gould, himself a customer with Ulster Bank, said the move by NatWest was really disappointing.
“We know the situation in Ireland with our banking sector – we need more choices, we need to be given more options and alternatives and losing Ulster Bank now is really disappointing.”
His party colleague, Sinn Féin’s spokesperson on finance, Pearse Doherty, has called on Government “to minimise the damage caused by Ulster Bank’s withdrawal”.
“What we’re looking for now is a seamless transition that doesn’t affect people’s mortgages or their loans or their day-to-day banking,” Mr Gould said.
He said that one of the party’s main concerns is that vulture funds could take over the bank's €20.5 billion loan book.
“One of the worries we have is that they might look at getting rid of some of their loan book to vulture funds. We’ve seen what happened in the past with vulture funds,” he said.
Fine Gael TD for Cork North Central Colm Burke similarly described the news of Ulster Bank’s withdrawal from the Irish market as “very disappointing”.
“I think it’s always good for a market, especially a financial market, that there is competition.
“Coming from a legal background and having dealt with home loans and drawing down loans for the last 30 odd years, it’s when there was competition there that you got competitive rates.
“Say for instance you have a very good business proposal and you go to your own bank and for some reason or another you don’t fit in within their lending criteria, you’re now limited as regards who else you can go to.
“I’ve seen some very big and very good business development proposals being shot down by people who were with a financial intuition for 20 or 30 years and then they had been able to go to another financial intuition and get that lending facility and then the projects worked out very well,” he said.
There are many serious implications over the decision of Ulster Bank to cease operations in the Republic of Ireland. Locally I worry about another building on Patrick Street needing reuse. I'm surprised to see that the building isn't listed. pic.twitter.com/yoeGjxADY6— Cllr. Dan Boyle (@sendboyle) February 19, 2021
Green Party Cork City Councillor Dan Boyle said today marks a “difficult day” for Ulster Bank’s staff and customers in the Republic of Ireland.
“There’s also the aspect of the physical presence of the branches, leaving holes on main streets across Ireland.
“I'm surprised to see that the building isn't listed,” he said.
“It will be one of several key buildings that are vacant on Patrick Street.
“One of the big questions is how will we shape the future of Patrick Street going forward and I believe that should be a key focus as we look at the Cork City Development Plan.”