Bad time to suggest London as Ulster Bank's regulator
Sources close to the bank have stressed this shouldn’t be interpreted as a precursor to an exit from the Irish market
THERE IS one story that captured the tunnel-visioned ambition of vilified former Royal Bank of Scotland chief executive Fred Goodwin for Ulster Bank back when Ireland was a good place to have a bank.
Goodwin was on one of his trips to visit Ulster Bank in the mid-Noughties when he spoke to staff at a town hall-type meeting explaining the bank’s “Journey to One” strategy to become Ireland’s biggest bank.
The speech was meant to rally the troops but Goodwin wasn’t an inspirational speaker. He was a details and brand man, more interested in cost-income ratio targets and ensuring the colour of the carpets at Ulster Bank matched those elsewhere in the rapidly growing RBS group.
Asked by a young female staffer what were the two greatest challenges to the strategy to become the number one bank in Ireland, Goodwin replied tersely, “AIB and Bank of Ireland”, and moved on to the next question.
The banking crisis and the recent computer crash at Ulster Bank have exposed the testing relationship between the Irish bank and its majority state-owned UK parent bank.
Goodwin is long gone and RBS has been left to manage the clean-up of a bank that has absorbed €12 billion of British public funds to cover heavy bad debts on property lending, a sum of money that RBS chief Stephen Hester admitted earlier this year was “too much”.
The computer meltdown also exposed Ulster Bank’s place in the pecking order within RBS, even though the bank stressed that the order of processing transactions was solely a result of technical reasons.
The priority of transactions run at the RBS processing facility in Edinburgh reflected Ulster Bank’s position as a small player in a large banking group – the NatWest and RBS transactions had to be processed first, simply because there was a greater number of them.
No other Irish bank has faced the triple whammy of heavy loan losses, a broken model where the bank is paying more for its money than it is charging customers on certain loans and a brand badly damaged by a month of technical disturbance that will end its relationship with many affected customers.
The offer of “tens of millions of euro” in compensation by Ulster Bank chief executive Jim Brown may not be enough to retain customers whose confidence in banking was shot long before this debacle.