NatWest Group said on Monday it is selling its remaining 11.7 per cent stake in PTSB as it hastens its exit from Irish banking after its Ulster Bank unit handed back its licence at the end of last month.
The UK banking group received an original 16.7 per cent stake in PTSB in late 2022 as part payment for Ulster Bank loans it sold to the Republic’s third-largest remaining bank. It subsequently sold down part of the stake two years ago.
Goldman Sachs and JP Morgan started selling the shares with institutional investors on behalf of NatWest after the end of trading in Dublin and London on Monday.
The stake was worth about €130 million based on Monday’s closing share price.
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While the Irish Government has an agreement in place with NatWest that allows both to sell shares at the same time as the UK lender, Minister for Finance Paschal Donohoe has decided not to sell down taxpayers’ 57 per cent interest at this time.
“Details of the placing price and the exact number of placing shares will be announced in due course,” NatWest said.
Shares in PTSB have advanced 56 per cent over the past 12 months, amid relatively high interest rates, a robust domestic economy, and as investors expect the bank to secure approval from the Central Bank to lower the amount of expensive capital it must hold against its mortgage book.
Every €100 of mortgages the bank issues has a so-called risk weighting of more than 40 per cent, against which it must hold more capital. The high risk-weighted assets (RWA) density is a result of the bank’s experience of the arrears crisis following the financial crash, when as much as 28 per cent of its mortgages were non-performing.
By contrast, the risk weighting on new Bank of Ireland and AIB mortgages is in the 20s, which means they can write new business more competitively.
Ulster Bank Ireland returned its banking licence to the Central Bank at the end of June, after 165 years in the Republic.
The company was renamed Ulydien DAC and will operate as a retail credit firm as it continues a “phased and orderly” withdrawal of its operations.
Ulster Bank received an effective £15 billion (€17.6 billion) bailout from British taxpayers during the financial crisis. The rescue bill equated to a third of the total UK government’s £45 billion 2008 bailout of NatWest, back when the group was known as Royal Bank of Scotland.
