Ulster Bank stops offering products for new business customers

UK-owned lender sees operating loss of €7m in first half of the year

If business customers have already applied for a product, or are already in the process of becoming a new customer, that will continue, the bank said. Photograph:  Nick Bradshaw

If business customers have already applied for a product, or are already in the process of becoming a new customer, that will continue, the bank said. Photograph: Nick Bradshaw

 

Ulster Bank will no longer take on new business customers from Friday outside of its Lombard asset finance business, as the lender continues to plan its withdrawal from the Republic.

If business customers have already applied for a product, or are already in the process of becoming a new customer, that will continue, the bank said. However, the bank confirmed that “availability of all of our products and services for existing customers ... is unchanged”.

The lender said it will generally only accept applications for new and existing personal banking customers until the close of business on October 29th, with the main exception being mortgages, which will remain available to existing customers only after that date.

Other exceptions include overdrafts for existing customers and applications that were in progress prior to the end of October.

The bank said in a statement that it is writing to existing customers giving them 60 days’ notice of this change and has also posted questions and answers on its website.

Operating loss

Separately, Ulster Bank posted an operating loss of €7 million in the first half of the year, down from a loss of €276 million a year earlier, its UK parent NatWest said on Friday.

Last year’s figure had been driven by €278 million of loan impairment charges as lenders raced to set aside money to cover an expected surge in bad loans due to Covid-19. The bank managed to free up €13 million of these provisions in the first half of this year.

NatWest confirmed in February that it was winding down Ulster Bank on a phased basis. It has subsequently reached agreement to sell €4.2 billion of corporate and large business loans to AIB and has broadly agreed to sell €7.6 billion of performing mortgages and micro-business loans to Permanent TSB (PTSB).

NatWest plans to take a stake of up to 20 per cent in PTSB as part payment for the loan sale. The UK bank’s chief executive, Alison Rose, told reporters on Friday that the planned shape of the PTSB deal, which will also involve the transfer of 25 branches and up to 500 employees, is “a good answer for the market, our shareholders, and customers and colleagues”.

The deal would see the Government’s 75 per cent stake in PTSB watered down to as low as 60 per cent.

Sources said last week that AIB is also in talks to acquire Ulster Bank’s €6.5 billion-plus low-profit tracker mortgage book.

Loans repaid

Ulster Bank’s loan book contracted to €19.4 billion by the end of June from €20 billion in December, according to NatWest’s latest report, as customers repaid loans at a faster pace than they took out new debt because of the decision to withdraw from the market. However, deposits only dipped to €21.6 billion from €21.8 billion.

NatWest’s wind-down of Ulster Bank will allow it to release about €2 billion of excess capital that is trapped in the Irish unit.

NatWest accelerated returning cash to shareholders on Friday after the wider group returned to profit in the first half as it released more loan-loss provisions than expected.

The bank said it will pay a dividend of 3 pence sterling per share and buy back stock worth as much as £750 million, after the Bank of England removed restrictions imposed at the height of the pandemic to make sure lenders could weather deep losses.

NatWest said it plans to hand over at least £1 billion a year to shareholders from 2021 to 2023 through ordinary and special dividends.