Ulster Bank confirms end-March deadline for impaired loans

Ulster Bank has confirmed that a group of its Irish business customers who face having their loans sold on to a third party have until the end of March to say if they will be able to repay or refinance their borrowings.

This follows confusion among some customers, who thought that the March 31st deadline related to the potential sale of their loans.

It is not clear how many business customers are affected by the proposed loan sales or the aggregate sum involved but the bank wrote to the borrowers recently, giving them 30 days’ notice to choose to either repay or refinance the loans, or have them packaged up and sold to a third party.

It is understood that 75 per cent of the loans involve borrowings that are severely impaired while the balance are in some form of arrears or default.

The bank has declined to comment on the profile of the customers but the loans are thought to be spread across various industry sectors.

In a statement issued earlier this month, the bank said: “Ulster Bank is in contact with a number of business customers, who are outside current arrangements or in arrears and under special management in our problem debt management unit, to discuss the potential inclusion of their debt in a future ...loan disposal process together with their options for repaying or refinancing their debt in advance of any such process.

“They are not mainstream customers, they are in our problem debt management unit and this action is part of the bank’s strategy to manage non-performing loans.”

Current accounts

It has been reported that if loans are included in a sale process by the bank, current account facilities will be withdrawn from customers with 60 days’ notice.

Ulster Bank's parent company Royal Bank of Scotland, has been working through the Irish bank's problem commercial real estate loans since the beginning of 2014.

A unit called RCR was established in January 2014 as a workout vehicle for non-core loans, with Ulster Bank transferring £4.4 billion (€5.6bn) of gross assets to the division.

It was expected to take about three years to work through these loans but the process was completed at the end of last year, reflecting the turnaround in the Irish economy.

Some £300 million in remaining loans were transferred back to Ulster Bank for management.

Last month, Ulster Bank's interim chief executive Paul Stanley said the bank plans to begin repaying the £15 billion bailout it received from RBS this year, subject to approval from regulators.

Ulster Bank made an operating profit of €362 million in the Republic last year, down from a surplus of €606 million in 2014.