Ulster Bank to cut 750 jobs and merge First Active

ULSTER BANK is cutting up to 750 jobs across its businesses on the island of Ireland and its sister bank, First Active, will cease to exist as a separate entity as the two lenders are to merge.

In the first major job cuts announcement by a mainstream bank in the Irish market, Ulster Bank will close 45 First Active branches and the remaining 15 will be transferred to Ulster Bank.

First Active customers with mortgages, loans and deposits at the bank will be transferred to Ulster Bank and the same terms, conditions and rates will apply.

Ulster Bank is seeking up to 550 job cuts in the Republic and up to 200 in Northern Ireland. The bank said a voluntary severance packaged would be offered to staff.

The job cuts amount to more than 10 per cent of the 7,000 staff employed at Ulster Bank and First Active, which are owned by UK bank Royal Bank of Scotland (RBS). Between 400 and 450 staff work in First Active branches.

The banks have been run separately since First Active, a former building society, was acquired by RBS in 2004 for €887 million.

The changes at the Irish banks follow troubles at RBS, which last week posted the biggest corporate loss in British history. The bank, which is almost 70 per cent owned by the UK taxpayer, said it could post a loss of £28 billion (€29.6 billion) for 2008 after writing down the value of its “toxic assets”.

Trade unions at the banks, the Irish Bank Officials’ Association (IBOA) and Siptu, warned that there must be no compulsory redundancies at either lender. Ulster Bank has said it will consult with the unions on the job cuts.

Larry Broderick, general secretary of the IBOA, said its members feel “very strongly that Ulster Bank Group staff are effectively being scapegoated for the mismanagement, incompetence and greed of senior management at RBS”.

Mr Broderick said the union would seek further clarification from RBS on its continuing commitment to its Irish operations after the restructuring.

The combined bank will have more than 1.8 million customers and 295 branches and business centres.

Ulster Bank has 237 branches – 145 in the Republic and 92 in Northern Ireland.

Referring to the jobs, the bank said that in addition to the branch closures, it had also identified the need to reduce costs significantly across all areas of its business.

This will ensure its operations are appropriate to the current market environment and the move to one brand, the bank said.

Cormac McCarthy, chief executive of Ulster Bank, said the changes for customers would be as straightforward as possible.

“They don’t have to do anything – there is a complete overlap between the businesses,” he said.

He expects the job cuts and branch closures to be completed towards the end of this year.

“The reality is that in a significantly changed marketplace there are only a few levers that you can pull and cutting costs is one of the them. There has also been a significant reduction in activity levels.”

He said that while RBS was carrying out a strategic review of all its operations, the decision to merge First Active into Ulster Bank was “taken at a local level”.

First Active specialised as a mortgage lender, leaving cash-based transactions to Ulster Bank.

It was one of the most aggressive lenders during the property boom, becoming the first bank to launch 100 per cent mortgages in the mainstream lending market.

As the financial crisis worsened, First Active cut lending, while Ulster Bank stopped selling mortgages through brokers.

First Active, which lends mostly through brokers, charged higher interest rates and restricted the size of new mortgages.

Ulster Bank and First Active were the only Irish banks not to pass on the full 0.75 percentage point European Central Bank interest rate cut last month.