Ulster Bank down to final €200m of deposits

UK-owned bank still has to find a solution for deposits linked to so-called offset mortgages

Ulster Bank was down to its final €200 million of customer deposits at the end of September, following a period of frantic activity by customers to find other providers to take care of their banking needs as the UK-owned lender hastened a retreat from the Irish market.

The figure was down from about €2 billion in March and €21 billion at the end of 2021, 10 months after Ulster Bank’s parent said it was winding down its operations in the Republic. The end-June figure was contained in NatWest’s first-half results statement on Friday.

The remaining deposits are believed to be mostly linked to so-called offset mortgages, where money in customers’ savings accounts is used to lower the balance – and interest due – on home loan accounts.

The bank still has to find a future home for these mortgages, having either sold or agreed to sell most of its loan book since NatWest decided in February 2021 that it was quitting the Irish market following years of sub-par profitability. Ulster Bank closed its last branches in April.


The Irish Times reported in August that Ulster Bank had agreed to sell most of its remaining loans, comprising performing and non-performing personal and commercial debt with a gross value of €694 million, to US distressed debt group AB CarVal Investors, as it continues its winddown.

AB CarVal has signed up to buy the loans through a vehicle called Elmscott Property Finance and has enlisted loan servicing firm Pepper Finance to manage the loans as legal title holder. Most of these loans are expected to transfer by the end of this year.

Ulster Bank had previously sold €14 billion of mortgages and commercial loans to AIB and PTSB as part of the winddown. While PTSB had a €20 billion loan book at the time of the exit decision, many loans subsequently matured or the borrowers moved to refinance their debt elsewhere.

Ulster Bank paid an €800 million dividend to NatWest in June, beginning the process of repatriating excess capital on its balance sheet as it hastens its exit from the Republic. The bank is estimated to have about €1.88 billion of reserves left that will be available for distribution to its parent in time.

Ulster Bank had previously paid €3.5 billion of dividends to its parent between 2016 and 2019, representing just a fifth of the £15 billion (€17.5 billion) bailout the unit received during the financial crisis.

NatWest shares plunged by as much as 18 per cent, the most since the Brexit vote, after it cut its profit outlook for the year. Its third-quarter earnings revealed a pre-tax profit of £1.3 billion that missed analysts’ expectations.

The bank also cut its guidance for lending margins in a signal that the benefits from higher interest rates had peaked. Its shares later recovered to trade down 10 per cent. NatWest is still 39 per cent owned by the UK government after its 2008 bailout.

Joe Brennan

Joe Brennan

Joe Brennan is Markets Correspondent of The Irish Times