Ulster Bank advances exit with plan to transfer € 7.6 billion in loans to PTSB

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Permanent TSB to secure € 7.6 billion in mortgages and other micro-business loans, along with 25 branches, in deal that marks new milestone in Ulster Bank’s plans , property of NatWest, to leave the Republic.

The deal advances the separate plan first presented in late February when NatWest struck a deal to transfer € 4.2 billion in commercial loans from Ulster Bank, but none of its 88 branches, to AIB.

He also made a first agreement with the permanent TSB at the time.

Under the latest deal, NatWest, 55% owned by the UK government, will acquire a stake of up to 20% in Permanent TSB.

The Irish state will not inject new money to fund the Ulster Bank transfer, but it does mean the government will dilute its long-standing 75% stake in the Republic’s third-largest mortgage lender.

Shares of Permanent TSB jumped 16% to value the bank, which has struggled for a long time since its bailout 10 years ago, to more than € 643million.

Led by CEO Eamonn Crowley, the bank’s share of the mortgage will rise from 15% to over 20%, as the consolidation of the Irish banking sector accelerates.

In a shock decision, mortgage bank KBC also announced this year its decision to leave the Irish bank, in favor of Bank of Ireland which plans to take most of its loans.

NatWest has yet to decide on the future of the remainder of Ulster’s € 8.9 billion loans out of a total € 20.5 billion portfolio it holds in the Republic.

The loans include € 7 billion in performing mortgages, which could still go to AIB, and around € 1.5 billion in non-performing loans made up of both household and business loans.

The transfer of branches is not expected to begin until next summer.

Mortgage brokers believe that the non-performing Ulster Bank mortgages – as has been the case in such previous multi-year transactions by Irish banks – will be sold to a vulture fund.

Daragh Cassidy of bonkers.ie said Ulster Bank customers facing the end of their fixed rate mortgage terms “will need to be careful” because Ulster was well known for offering the best competitive rates.

Ireland has long had some of the most expensive mortgage rates in the eurozone and the industry’s contraction is bad news for customers, senior broker Michael Dowling said.

Brendan Burgess on the Askaboutmoney website said Ulster competed with low rates by offering no cash back loans, while Permanent TSB offered cash back with more expensive rates.

Up to 500 jobs of the 2,800 Ulster Bank employees in the Republic will be transferred to the permanent TSB.

The Financial Services Union has said it hopes more jobs at Ulster Bank can be secured through future loan transfers.

However, he said “the big picture” was the contraction of Irish banking services and the consequences for customers.


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