Ulster Bank CEO says problem loans sale unlikely before 2023

Ulster Bank's chief executive in the Republic, Jane Howard, said on Wednesday that the lender has "made a very deliberate decision" to delay a sale of its non-performing loans (NPLs) until after it has finalised deals to sell the rest of its loan book.

Speaking to the Oireachtas finance committee, Ms Howard said it is unlikely that the lender will reach a deal on its NPL portfolio, currently estimated to amount to about €1.5 billion of loans, mainly mortgages, until "after 2022".

Ulster Bank's UK parent decided in February to withdraw from the Republic on a phased basis. It reached a binding agreement in June to sell about €4.2 billion of commercial loans to AIB and signed a memorandum of understanding a month later that would see it sell €7.6 billion of loans and 25 branches to Permanent TSB (PTSB).

Ms Howard told the committee that she is “hopeful” Ulster Bank and PTSB will reach a binding accord “in the very near future”. The Irish Times has previously reported that Ulster Bank is also in talks to sell its €6.5 billion tracker mortgage portfolio to AIB.

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All the deals remain subject to approval from the Competition and Consumer Protection Commission.

Engage

Ms Howard said Ulster Bank has been actively encouraging borrowers facing financial distress to engage with the bank to try and find a sustainable restructure that could put them on a path to performing status and possible inclusion in loan sales to mainstream banks.

“We made a deliberate decision not to deal with [the sale of] non-performing loans until we’ve dealt with the performing assets,” she said.

The approach differs from that taken by KBC Bank Ireland, which also announced earlier this year that it was retreating from the Irish market.

KBC Ireland said in late August that it had agreed to sell most of its NPLs, amounting to €1.1 billion, to US distressed debt group CarVal – almost two months before it entered a legally binding deal to sell its performing loans to Bank of Ireland.

Ulster Bank expects to complete most of its envisaged asset transfers to PTSB and AIB in the second half of 2022.

Ms Howard reiterated that the bank does not plan to close any branches or launch a company-wide redundancy scheme until at least after the first half of next year.

Staff departing

However, the bank has seen almost 300 staff depart so far this year, following confirmation of its phased withdrawal from the market. A spokeswoman told The Irish Times that the bank’s headcount currently stands at 2,530. That’s down from about 2,800 at the start of 2021.

About 280 Ulster Bank staff are on track to transfer to AIB with the €4.2 billion corporate loan book, while as many as 500 will move to PTSB. More may shift with a deal on the tracker loan book.