The UK owner of ULSTER Bank considered leaving the Irish market for two years before disclosing the possibility and notifying the government and central bank of its plans in late 2020.
Documents filed by NatWest with the Competition and Consumer Protection Commission (CCPC) show that Ulster’s parent bank determined in 2018 that its Irish subsidiary was unable to deliver the desired returns.
By March 2019, RBS’s board — as NatWest was then known — had “considered a wide range of exit options” for Ulster Bankincluding winding down operations, but decided to go ahead with a stabilization strategy under chief executive Jane Howard.
But while there were regular internal discussions in Dublin and London about the future of the state’s third-largest bank, and the decision to leave was finally taken in June 2020, NatWest only entered into talks with official stakeholders in October 2020. in Ireland.
By then, NatWest had admitted it was undergoing a “strategic review” of its Irish operations. In February 2021, after completing that assessment, the bank announced a full withdrawal from Ireland, while selling loan portfolios.
The documents, including board minutes and notes from NatWest executive committee meetings, are summarized and excerpted from the CCPC decision on AIB’s acquisition of €4.2 billion in commercial loans from Ulster Bank – part of NatWest’s withdrawal plan.
They reveal a bank that is looking for the easiest way out of a market where for years it was unable to achieve a financial return above the cost of capital.
Over the course of several meetings from 2019 to 2021, senior figures at NatWest weighed up various exit options for Ulster Bank.
They examined mergers with at least two potential partners (not named in the report), a gradual withdrawal from the Irish market and a rapid run-down of short-term loans, followed by a sale of residual assets to a financial buyer.
In June 2020, Ulster Bank abandoned its search for a new Dublin headquarters, with Ms Howard citing Covid remote work arrangements in response to inquiries from the Irish independent.
But that statement came just a week after NatWest’s executive committee concluded that Ulster Bank could not deliver an adequate return and the board of directors “recognized that winding down … would probably be most beneficial”.
However, that opinion had evolved in October 2020, when NatWest reached its final plan to sell Ulster Bank’s performing loans in a bid to accelerate the “repatriation of capital” from Ireland to the UK.
In December 2020, NatWest identified AIB as the preferred buyer for its business portfolio and held a managed exit plan as a backstop, according to the CCPC report.
Only one “viable alternative” to AIB was mentioned in the report, but NatWest rejected it because it was a financial buyer — likely a hedge fund or private equity firm — that lacked the capacity to serve clients.