NatWest considers closing Ulster Bank in the Republic

Winding down bank would put 2,800 jobs at risk

Ulster Bank's UK parent is actively considering winding down the lender in the Republic, as the challenge of turning around a business struggling with high costs and low profitability has become even greater as a result of the coronavirus crisis, according to sources.

This puts more than 2,500 jobs and the future of its 88 branches around the State at risk.

A run-down of the business would take an estimated six years and involve a number of loan portfolio sales, which would attract both rival banks and non-bank lenders, industry sources said. Ulster Bank’s customers would also be required to make alternative arrangements for their day-to-day banking needs.


NatWest, formerly Royal Bank of Scotland (RBS), is also weighing the merits of Ulster Bank Ireland merging with another lender, though this is said to be a less likely outcome.


While 75 per cent Government-owned Permanent TSB would be the most likely candidate for a tie-up, it is understood that no approaches have been made by NatWest. An exit of Ulster Bank would also increase the dominance of Bank of Ireland and AIB in the market and would be a major blow to competition here, given that are just five main lenders in the market.

The strategic review, which is being tightly guarded and run out of the UK, is at an advanced stage and comes as NatWest's chief executive, Alison Rose, approaches the first anniversary in November of her time charge of the UK banking giant. Ms Rose set about restructuring the group's main problem child, its NatWest Markets investment banking division, last February with plans to halve the size of that business. She also ditched the RBS name this year.

FSU, the main union representing financial staff, on Thursday expressed shock at news of the review, and called on Ulster Bank to immediately reassure Ulster Bank employees.

“If this story is substantiated, we are shocked and angry at how the bank is treating staff. We have been engaged in good faith in a restructure process over the last number of weeks to secure jobs and minimise redundancies and the bank reassured us of the commitment from Natwest to Ulster Bank,” said FSU general secretary John O’Connell.

“ I immediately call on both Jane Howard [Ulster Bank chief executive] and Alison Rose to refute this story and assure the thousands of staff here in Ireland of their jobs,” he added.


The Edinburgh-based RBS group formally split Ulster Bank's operation in the Republic from Ulster Bank Northern Ireland in 2015. The sources said the Northern Ireland unit is not affected by the review.

RBS inherited Ulster Bank and an exposure to the Celtic Tiger economy in 2000 through its takeover, under then group chief executive Fred Goodwin, of National Westminster. It doubled down three years later in Ireland through the purchase of First Active.

Ulster Bank received a bailout from RBS of £15.3 billion (€16.4 million) after the 2008 crash, about a third of the money UK taxpayers pumped into the entire group.

Having spent more than last decade selling off problem loans, cutting jobs and branches, the Dublin-based unit’s assets had shrunk to €30.6 billion by the end of last year – less than half what they were at the peak.

Ulster Bank’s costs have remained stubbornly high and it has consistently failed to make enough money to cover its own funding costs in recent years. Its cost to income ratio was 98.4 per cent in the first half of this year.


Ulster Bank made a €276 million operating loss for the first six months of 2020, compared to a €26 million profit for the same period in 2019, as it set aside €278 million to cover likely loan losses resulting from the coronavirus crisis, and as new lending fell sharply.

Responding to questions from analysts on a conference call on the day of NatWest’s results in August, Ms Rose that while the strategy of growing Ulster Bank “hasn’t changed”, Covid-19 “presents different challenges to the economy, and we will continue to consider all strategic options in relation to that business”.

A spokesman for NatWest and spokeswoman for Ulster Bank declined to comment on its plans.

RBS seriously considered its future in the Republic on a number of times since the financial crash, most recently in 2014 when it hired Morgan Stanley to look at options, including merging with PTSB or Belgian-owned KBC Bank Ireland and selling a stake to private-equity investors. It decided against taking any action at the time.

Joe Brennan

Joe Brennan

Joe Brennan is Markets Correspondent of The Irish Times