THE CHIEF executive of Royal Bank of Scotland (RBS), owner of Ulster Bank, has said the Irish bank may hold some assets that are eligible for the National Asset Management Agency (Nama).
However, Stephen Hester said the “substantial assets” held by Ulster Bank would be processed through the UK government’s asset protection scheme (APS), the British alternative to Nama.
It is understood that more than £20 billion (€22 billion) of £57 billion in total loans at Ulster Bank will be moved into APS, which will allow RBS to insure against future losses over a longer period of time.
But speaking on a conference call with analysts last Friday, Mr Hester said there was “a small element” of loans that had been removed from Ulster Bank’s APS portfolio because they were “otherwise eligible for Nama”.
“We haven’t decided whether to put it in there or not, but it is still only a small element of Ulster Bank that changed,” said Mr Hester. “And we remain committed to the support of Ulster Bank, as we have always been, and as we are of all our subsidiaries.”
The Government has said foreign banks can apply to join Nama but it does not expect them to participate in the plan.
RBS has injected just over €2 billion in additional capital into Ulster Bank this year.
The Irish bank made an operating loss of £85 million in the third quarter of the year as bad debts surged and profit margins were squeezed. The loss made Ulster Bank the worst-performing division in RBS, which is part-owned by the UK government.
“Ulster Bank’s performance reflects a very difficult economic environment in Ireland and the resulting high impairment charges and lack of new business volumes,” said Mr Hester.
“We expect these conditions to continue for the foreseeable future and we’ve focused on improving our operating efficiency there.”
The bank has separated out £15 billion of its loans, comprising mostly commercial property loans and loss-making tracker mortgages, into a non-core division, most of which will end up in APS.
The bank had £17 billion in commercial property and £24.6 billion in residential mortgages in the group at the end of last year.
