Ulster Bank clamping down on firms with long-term arrears

Ulster Bank is embarking on a fresh clampdown on businesses seriously behind on loan repayments in a bid to clean up its balance sheet.

The Irish lender sold thousands of property bubble-era loans to investors such as US company Cerberus Capital Management in a programme that started in 2013 and ended late last year.

Ulster has begun contacting businesses with long-term loan arrears, telling them they should either repay or refinance their debts, or risk having them sold to a third party.

Outstanding debts

The contacts are part of a new initiative meant to clear outstanding debts with long-term arrears from its books, that could result in further sales such as Project Aran where Cerberus bought €6 billion worth of property loans from the bank in December 2014.

A spokeswoman confirmed it has been in touch with a number of business customers who are in arrears and part of its problem debt management unit, to discuss potential inclusion of their liabilities in a “future Ulster Bank loan disposal process”. It also outlined the options for repaying or refinancing their debts before any such sale got under way. “They are not mainstream customers, they are in our problem debt management unit and this action is part of the bank’s strategy to manage non-performing loans,” the spokeswoman said.

Ulster is not known to be focusing on any particular industry or sector but, according to reports, it has contacted large numbers of farmers and small businesses in the clampdown.

Farmers are seen as a particularly vulnerable group as poor prices for dairy and beef, two of Irish agriculture’s mainstays, are putting many under financial pressure.

Dairy farmers

However, as the loans the bank is tackling have been on its books a long time, it is understood farmers who borrowed to boost production before the end of the EU milk quota system last year are unlikely to be included. Ulster’s parent,

Royal Bank of Scotland

, established a capital resolution vehicle in 2013 to rid the overall group of €46 billion worth of loans that dated back to the credit and property booms that led to the 2008 financial crash.

The Irish bank's interim chief executive, Paul Stanley, said last month it plans to repay the €19 billion bailout it received from its parent in the wake of the collapse.