Ulster Bank loses €3bn in loan write-offs

Figure includes £2.2bn charge for transfer of £9bn in assets moved to RBS bad bank

RBS indicated Ulster Bank would be scaled down in the Republic.  Ulster Bank chief executive Jim Brown acknowledged this would result in branch closures and job losses. Photograph: Dave Meehan

RBS indicated Ulster Bank would be scaled down in the Republic. Ulster Bank chief executive Jim Brown acknowledged this would result in branch closures and job losses. Photograph: Dave Meehan

 

Ulster Bank recorded impairment losses on its non-core portfolio of £3.03 billion last year. This represented 26.1 per cent of gross customer loans and advances, with the charge relating to property development alone trebling to £1.8 billion.

This emerged yesterday from the publication of Royal Bank of Scotland’s results for 2013.

It included a hefty charge of £2.2 billion in the fourth quarter of last year, which relates to the £9 billion of assets that are being moved from Ulster Bank to RBS’s new internal bank to be run down over three years.

On a more positive note, core Ulster Bank loan impairments fell by £482 million to £882 million, mainly as a result of continued improvement in retail mortgage debt-flow.


Significant fall
The accounts show mortgage impairments fell significantly last year to £235 million from £646 million in 2012.

Chief executive Jim Brown said that the number of customers in arrears of 90 days or more fell by 2,000 last year. The arrears balance was reduced by €900 million, “demonstrating the effectiveness of our approach to helping customers in difficulty”.

However, the number of repossessions increased sharply from 84 in 2012 to 136 last year. Mr Brown said most repossessions continued to be voluntary surrenders by borrowers but the bank had initiated legal actions against customers who had refused to engage with the bank.


Bad bank
He said the transfer of £9 billion of non-performing loans to RBS’s internal bad bank – called RCR – would enable Ulster Bank to “focus on building a really good core bank that serves our customers well”.

RBS reiterated its commitment to Ulster Bank in Ireland yesterday. It said the bank in Northern Ireland would benefit from “closer integration” with RBS’s personal and business franchises in Britain.

In the Republic, RBS indicated that the bank would be scaled down to become a “compelling challenger bank” to AIB and Bank of Ireland.

Mr Brown acknowledged this would result in branch closures and job losses but declined to say how many.

At a group level, RBS made a loss of £8.5 billion in 2013, up from £5.9 billion in 2012. This was its biggest full-year loss since its UK Government bailout in 2008.