Ebene News – GB – Ulster Bank confirms end of Irish operations causing rush to loan books

The owner of Ulster Bank – the British group NatWest – has confirmed his intention to shut down operations in the Republic, a move that will significantly reduce competition and put more than 3,000 jobs at risk

NatWest made the decision after unexpectedly launching an assessment last year on the future of its 88 branches and 20 € 5 billion in mortgage and business loans in the Republic

The decision to step down from the bank which employs 2,800 people in the Republic is unprecedented for a major player in Irish banking and will further strengthen existing lenders, particularly the dominant banks AIB and Bank, which hold well over 50 % of total mortgage loan

NatWest said it has decided that Ulster Bank in the Republic will not be able to make good returns anytime soon and that it “will begin a phased out of the Republic of Ireland over the next few years”

The move has already started a scramble for parts of its loan books from rival banks

Ulster Bank says AIB will buy 4 billion euros of its commercial loans, with a final price agreement yet to be reached

He also indicated that he was at the start of discussions with Permanent TSB and other unidentified “strategic banking counterparties” regarding the sale of its loans to individuals and small businesses.

“Our preference is to continue to focus our discussions with counterparties who can provide customers with full banking services in the Irish market,” he said, but without excluding the sale of loans to the so-called funds vultures

Experts said the move out would mean the cost of mortgages and small business borrowing – which are already among the highest in Europe – is unlikely to drop anytime soon

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Economists and banking consultants have called on the government to create a state-owned bank to fill the vacuum left by the departure of Ulster Bank and to pass legislation to cap the cost of borrowing for mortgage borrowers and businesses

Ms Howard said that “it will be a difficult and worrying time for our colleagues across the bank It can also lead customers to question and worry about the impact of this decision on them and their customers. daily banking needs “

The exit of Ulster Bank from the Republic marks a crisis comparable to the banking crisis of 10 years ago, with disastrous consequences for mortgage and business customers of all lenders, have warned industry figures and banking economists

Experts said his decision to end operations in the Republic marked a “disaster” for an already dysfunctional and expensive banking market, and that the distribution of the lender’s € 20 billion in loans between vulture funds and existing players like AIB will probably only make matters worse

The financial services union said last night it was an ‘unbelievable’ act of cruelty for NatWest to have guarded the future of the 2,800 Ulster Bank workers in the Republic and the 600 people in Belfast on the edge since it emerged in September that the lender’s operations were under review

Public lenders AIB and Permanent TSB (PTSB) have already planned to bid for billions of euros in loans the Ulster Bank holds with Irish companies large and small, while PTSB may also be interested in the buying part of the house mortgage book it appeared

A wide range of industry experts, consultants, economists and academics have told the Irish Examiner that leaving Ulster will inevitably lock in on the expensive mortgage and commercial interest rates that are already among the highest in Europe

Many experts have said the government will have to go far beyond just talking about creating a “third banking force” – which was first mentioned a long time ago in the 1990s – to counter the dominance of the AIB and the Bank of Ireland, and instead of creating a new state bank for mortgage loans and lenders to SMEs

Senior economist Jim Power said the departure of Ulster Bank created the second banking crisis for the government and the economy in 10 years

The state will have to get involved in one way or another as the Irish banking market has not been functioning for a long time, he said, calling for the introduction of emergency legislation to short term to cap interest rates on mortgages and small business loans, “or whatever, the state has to get involved,” Mr. Power

The two big players already hold almost 60% of the mortgage market between them, so the other five players will fight for the rest, and Ulster’s 14% of home loans will be up for grabs, said Michael Dowling, a leading mortgage broker

M Dowling said the news of the Ulster Bank review was already having a big effect on competition, and since September he has informed clients that competitive Ulster mortgages could fall into the hands of the AIB, Bank of Ireland, or a vulture fund

“The state will have to create a state bank or offer a privileged deal to someone else,” said John Whelan, managing partner of Linkage-Partnership. “I know they don’t like to do it, but in the event of a market failure, the government must intervene “

Banking expert Ray Kinsella, a former professor at UCD Smurfit Business School, said he had long believed that a new start was needed in Ireland’s banking sector as the government had to step in to create a bank that is not obliged to return dividends to shareholders

Dermott Jewell, policy adviser at the Consumers Association of Ireland, said it was extremely difficult to attract new players since the financial crash

He said there has been a market failure and the government will have to intervene in one way or another

Teeling Whiskey founder John Teeling said: “Exit introduces more uncertainty in times of economic crisis”

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Ulster Bank, NatWest, NatWest Group, Finance, Ireland, Allied Irish Banks

Ebene News – GB – Ulster Bank confirms end of Irish operations causing rush to loan books

Source: https://www.irishexaminer.com/business/arid-40229738.html