Ulster bank to pull out ?

joe sod

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They are not closing in Northern Ireland though same story as Danske bank they also stayed in the North. It must be alot to do with none performing loans and being unable to repossess properties that are not paying the mortgage.
 
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I can see why RBS want to exit Ireland:
- Surplus deposits at negative rates.
- Costly legacy branch network.
- Lending slowing.
- Given the state of their IT systems, a merger with PTSB would be very costly and take many years to integrate.
- A merger with KBC was recently ruled out by KBC.
- Emerging app competition without legacy costs.

But exiting Ireland would take a long time, be costly and many resources. The article says the wind down would take 6 years. I bet it will take a hell of a lot longer.

Sad to see yet another bank likely to exit Ireland.
 

joe sod

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@CiaranT but why are they not exting the North or UK there has to be something disfunctional in the irish financial landscape. Danske made the exact same move 6 years ago. I'd say even BOI or AIB might like to get out too except they are still handcuffed to the state
 

peemac

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@CiaranT but why are they not exting the North or UK there has to be something disfunctional in the irish financial landscape. Danske made the exact same move 6 years ago. I'd say even BOI or AIB might like to get out too except they are still handcuffed to the state
They are relatively small here. They are the dominant bank in the UK.
 

NoRegretsCoyote

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They are not closing in Northern Ireland though same story as Danske bank they also stayed in the North. It must be alot to do with none performing loans and being unable to repossess properties that are not paying the mortgage.
NatWest is a sterling bank and NI is a sterling economy.

Maybe they reckon there is too much risk in having a business (Ulster) that operates in euros. Euro area interest rates are just lower than sterling rates and this produces problems when you have a lot of deposits.
 

peemac

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I can see why RBS want to exit Ireland:
- Surplus deposits at negative rates.
- Costly legacy branch network.
- Lending slowing.
- Given the state of their IT systems, a merger with PTSB would be very costly and take many years to integrate.
- A merger with KBC was recently ruled out by KBC.
- Emerging app competition without legacy costs.

But exiting Ireland would take a long time, be costly and many resources. The article says the wind down would take 6 years. I bet it will take a hell of a lot longer.

Sad to see yet another bank likely to exit Ireland.
I reckon you have a copy of their internal report :D :D :D - its as accurate description you could get

The new streamlined players such as KBC (newish to general banking and very much moving to branchless), Revolut, Avant & N26 and more to come all of whom will have a very low cost base probably was the nail in the coffin as lending margins will get smaller

With so much commentary on it, I suspect an official announcement is not far off.
 

MrEarl

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KBC do business lending and ptsb also offer it.
I think that you'll find that neither do much, when it comes to the SME sector. They've limited experience (KBC used to have more, but wound down and jettisoned a lot of relevant staff), or product offerings.

PTSB only do relatively small and generally (property backed) secured transactions.

KBC are very selective and tend to only lend to professionals.
 
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MrEarl

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Ulster Bank have participated in every one of the main SBCI backed schemes to date, along with AIB and BoI. That probably tells us all something about how they are seen, by the SBCI.
 

NoRegretsCoyote

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It should be the opposite; if you’re a Sterling business with Sterling exposure, having a foothold in Euroland should be a positive.
Why?

Let's say euro business is five per cent of their balance sheet. The fluctuates a lot with the exchange rate. Presumably there is other infrastructure that has to be maintained solely for a euro area presence.
 

MrEarl

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Why?

Let's say euro business is five per cent of their balance sheet. The fluctuates a lot with the exchange rate. Presumably there is other infrastructure that has to be maintained solely for a euro area presence.
If NatWest want to have a Euro presence, the ideal position for them would be to have a Euro banking licence, UB could provide same. (As a brief aside, take a look at what Barclays have done, with their Irish business).

If NatWest don't want to have a Euro presence, then clearly that's a negative for UB, but then investors need to ask themselves if they want to be exposed to a UK only Bank.

With the current mess that's known as Brexit, there's likely to be a more negative impact on the UK economy etc. I thnk NatWest would be mad, to have all of their eggs in one basket. Granted, it does mean that they only have to deal with one regulator, one currency, one set of legislation etc.
 
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NoRegretsCoyote

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If NatWest want to have a Euro presence, the ideal position for them would be to have a Euro banking licence, UB could provide same.
If that's all you want then I don't think you have to maintain a branch network, take retail deposits and do consumer lending.

My point is that Ulster's RoI operations seem weakly profitable and from the perspective of London there is currency risk as well. There doesn't seem to be much diversification benefit from having a small part of your balance sheet doing business with the Irish economy.
 

Brendan Burgess

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Folks, I have moved the questions relating to mortgage holders to this thread


Brendan
 

joe sod

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@NoRegretsCoyote why are they so worried about Euro exposure if Ireland only a small part of their operations. In the second instance why did danske bank get out of Ireland but maintain sterling exposure in northern Ireland even though they are neither a Euro or a sterling bank . It has to be issues to do with banking in the republic of Ireland. I think ever since the financial crash the government has used the banks as whipping boys, and we went from under regulation of banks to over regulation, and the Irish courts are a law onto themselves with regard to repossessions
 

letitroll

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As much as we all love to hate banks - think we can all agree that a robust, profitable banking system is in everyone's interest.

Its a tough one for policy makers - the Irish market banking profit pool is just too small (if it was bigger the new entrants would have arrived already).......the government has dreamt of creating a genuine third player to counter the dominance of AIB/BOI...UB + PTSB + XYZ was the only hope of that and this announcement quite clearly gooses that completely. It might be time for the policy makers to accept that the size of Ireland points towards a natural duopoly structure.

I'm coming around to the thought that consolidating the Irish banking landscape down into the two main players is now the only viable road forward > allow BOI/AIB to acquire & split UB's Irish assets (BOI could 'swap' its Northern Irish assets to UB in lieu of payment).

In return for cementing the duopoly - the Central Bank of Ireland should/would then need to regulate them like utilities - cap net interest rate margins / ROA, ROE, mandate cost to income ratios to the level of US peers (so they dont get internally bloated).
 
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