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British banking giant NatWest confirmed on Friday that it was conducting a strategy review at Ulster Bank in the Republic, after The Irish Times reported that a liquidation of the lender was being considered.
“We continue to assess the impact of Covid-19 and the challenges to the economy and we are reviewing our strategy appropriately and responsibly in light of these events,” said a NatWest spokeswoman.
“In the event that changes are made to our strategy, they will be made with any impact on customers, colleagues and shareholders in mind first. Our priority now is to remain focused on supporting our clients and colleagues through these difficult times. “
Meanwhile, the strategy to grow Ulster Bank in the Republic “organically and safely remains unchanged.”
The Covid-19 crisis has slowed demand for loans and is expected to lead to a surge in bad loans, and Ulster Bank has been struggling for years with high costs and low profitability.
Sources have said that in addition to considering a liquidation of Ulster Bank, NatWest, formerly Royal Bank of Scotland (RBS), was also weighing the merits of merging the business with another lender, although the latter is said to be a less likely outcome. .
While the 75 percent permanent state-owned TSB is considered the most likely candidate for an alliance, NatWest has not made any approach. A roundup of the business would take about six years and involve a series of loan portfolio sales, attracting both rival banks and non-bank lenders, industry sources said.
Jobs at risk
A spokesman for the Finance Department said it “pointed out” the report that NatWest was examining options for Ulster Bank, which has “a considerable market share in terms of home loans and SME loans.”
“It is important to have competition in all sectors, but particularly in banking, in order to provide more options and lower-cost services for clients,” he said.
Ulster Bank announced last week that it would cut 266 jobs, or 9.5 percent, of its workforce in order to control costs as banks in Europe grapple with a prolonged revenue squeeze caused by moderate growth in revenues. ultra-low loans and interest rates. Covid-19 has increased the pressure on the sector. AIB and the Bank of Ireland announced this year that they plan to cut 2,900 employees combined in the coming years.
With a liquidation of Ulster Bank on the table, the jobs of the more than 2,500 remaining employees, as well as its 88 branches, are at risk. An exit from Ulster Bank would also increase the dominance of the Bank of Ireland and AIB in the market.
Financial Services Union wrote to NatWest CEO Alison Rose and Finance Minister Paschal Donohoe to raise their concerns.
The union had been involved in ongoing negotiations on restructuring at the bank and this strategic review had at no time been disclosed to the union, it said. Your Ulster Bank trading team will meet over the weekend to consider further steps.
“This is a shocking revelation for staff and their families, and it goes against all the commitments that both Ulster Bank and RBS / NatWest have made to FSU and staff over the past few years,” said Gareth Murphy, lead negotiator. union with Ulster Bank. “We are in the middle of difficult restructurings to secure the future of the bank when it lands in the media.”
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