Three Ulster Bank clients have €370m in distressed loans

THREE ULSTER Bank customers were responsible for a £294 million (€370 million) increase in non-performing loans at Royal Bank of Scotland, the UK government-owned bank said yesterday as it disclosed greater levels of financial stress among commercial property borrowers within its Irish subsidiary’s core division.

The cost of the computer glitch at Ulster Bank last summer increased by a further £54 million (€68 million), pushing the cost of IT failure to £82 million (€103 million), the quarterly results show.

This includes €52 million set aside to compensate 750,000 customers across the island of Ireland who were unable to access their accounts for about a month due to the error.

The total provision taken for the IT meltdown that locked hundreds of thousands of Ulster Bank, RBS and NatWest customers out of their accounts during June and July stands at €220 million.

RBS is expecting “some additional costs” to the bank over the coming months as it pays out on customer claims and costs associated with the computer glitch.

“In a continuing challenging environment, in which recovery from the group technology incident was a primary focus, Ulster Bank delivered a slightly improved financial performance,” said Ulster Bank chief executive Jim Brown in a statement.

Mortgage arrears at Ulster Bank rose as unemployment remained high, though they were “exacerbated” by a “temporary disruption” to debt collections as a result of the computer error.

Operating losses at Ulster Bank’s core business, which has loans of €40 billion, were €306 million, an improvement of €4 million on the previous quarter.

The lender, the third-largest retail bank operating in Ireland, did not reveal the operating performance on a further €16 billion of “non-core” loans earmarked for wind-down over time.

RBS reported a slowdown in souring loans at Ulster Bank. Total impairments on core and non-core loans were €621 million, down from €648 million in June.

Risky corporate loans in Ulster Bank’s core division rose by €630 million in the quarter as a small number of big borrowers fell into difficulty and had their loans restructured, RBS said.

RBS said that more commercial property loans had been moved into “problem management”.

Ulster Bank has taken provisions amounting to just over 22 per cent of €56 billion in loans.