RBS seeks to increase Ulster Bank’s share of mortgage market

Royal Bank of Scotland wants to increase Ulster Bank’s mortgage market share, improve its capital efficiency and reduce its costs, group chief executive Ross McEwan told a Bank of America Merrill Lynch conference on Tuesday.

Mr McEwan said Gerry Mallon’s focus as Ulster Bank’s new chief executive was on “driving a strong and profitable bank recognising the need to reduce the cost base”.

“We will get cost in excess capital out of this business and focus on . . . and growing this business safely,” he said. “We want to increase our mortgage market penetration and improve capital efficiency. We’re seeing good new business volumes growth, and costs are coming down. They’re down 2 per cent on like-for-like basis compared to last year.”

Ulster Bank had an 18 per cent share of new mortgages in the first quarter of this year.

‘Unique opportunities’

Mr McEwan said the UK’s recent decision to exit the EU meant that there “are likely to be unique opportunities for major UK and Irish banks”.

He said the Ulster Bank brand had been “refreshed” and its new brand positioning was “much more reflective of the bank we are becoming”.

“Banking has traditionally been an area that people have been slow to embrace digital, historically preferring the security and personal elements of face-to-face banking.

“Today, we are at a turning point in this tradition. Increasingly, our customers will further interact with us digitally. Over four million of our personal customers actively bank through their phones, and that’s growing at about 20 per cent per year.”

Mr McEwan also spoke about Williams & Glyn, a separate entity that it was trying to set up for an initial public offering (IPO) in line with an agreement with the European Commission. The business is run by former Ulster Bank chief executive Jim Brown.

“We recently took a decision to stand down the current plan of action of creating a cloned bank for IPO, given the lower interest rate environment,” he said. “With rates much lower for much longer it was clear that the business would not be able to grow its balance sheet to the extent necessary to deliver returns above cost of capital within the next five years.”

Mr McEwan said RBS had looked at a trade sale at the end of last year and was now considering "some other alternatives" for Williams & Glyn.