Ulster Bank deposits fall to €2bn amid ‘big switch’

Ulster Bank’s deposits fell 71 per cent to £1.8 billion (€2 billion) during the first three months of the year as customers continued to move their banking activities at pace to other providers as the UK-owned lender hastened a retreat from the Irish market.

Customer deposits had stood at almost €21 billion at the end of 2021, 10 months after Ulster Bank’s parent, NatWest, said that it was winding down its operation in the Republic. Ulster Bank closed its remaining 63 branches in the State last Friday.

The latest figures were contained in investor slides published on Friday as NatWest reported quarterly figures. The group posted better-than-expected profit for the first three months of 2023, demonstrating resilience despite unease about Britain’s economic outlook amid persistent inflation.

NatWest reported pretax profit of £1.8 billion for the first quarter, above the £1.6 billion average of analyst forecasts compiled by the bank and up on £1.2 billion the prior year.

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NatWest said it saw some £19.8 billion in deposit outflows in the quarter, which it blamed on the wind-down of Ulster Bank, customer tax payments and competition from other banks for savers’ money.

Since Ulster Bank started a campaign early last year to get customers to move their banking, 99 per cent of personal current and deposit accounts have either been closed, remained inactive or seen customers wind down to low levels of activity, the bank said last week. The same has applied to some 91 per cent of business accounts.

The Irish Times reported last week on how Ulster Bank is laying the ground for plans to repatriate excess capital to its UK parent.

The bank has passed shareholder resolutions, following procedures allowed under Irish company law, that have created “profits available for distribution” of €4.24 billion, according to recent filings with the Companies Registration Office (CRO). This represents the so-called share capital and share premium on its balance sheet as of the end of last year.

However, the actual amount that will ultimately move back to the UK will need to take in accumulated losses built up by Ulster Bank as it continues to run down its business. Retained losses at the end of last year stood at €1.59 billion, resulting in total shareholder funds of €2.63 billion.

A spokeswoman declined to comment on when the bank will start making transfers to NatWest Group, adding that “any capital repatriation remains subject to regulatory approval”. The company said in its annual report that it will still take “a number of years” to fully withdraw from the market.

The bank had previously signalled that it would be next year at the earliest before it returns its licence to the Central Bank.

NatWest has previously said that the Ulster Bank withdrawal would ultimately cost €900 million. The UK group also took a 16.7 per cent stake in Permanent TSB last year as part-payment for loans it sold to the Irish state-controlled bank.

– Additional reporting, Reuters.