The owner of the Royal Bank of Scotland, NatWest Group, hailed a “milestone” in its move to withdraw Ulster Bank activities from the Republic of Ireland.
NatWest and Ulster Bank Ireland have entered into a legally binding agreement to sell approximately â¬ 7.6 billion in gross performing loans and 25 branches to Permanent TSB. It comes after the parties first announced a memorandum of understanding to explore a deal in July.
The sale includes untracked mortgages, performing loans to micro-SMEs, the asset finance business of Ulster Bank Ireland and a subset of its branches. The weighted credit risk assets associated with the portfolio amounted to â¬ 3.1 billion as of June 30, 2021.
NatWest believes that Ulster Bank Ireland will recognize a loss on the disposal once the transaction is closed, although the final amount “will depend on movements in the ledger and other factors between now and closing, the timing of which remains uncertain”. But it will receive 16.66% of the enlarged share capital of Permanent TSB.
Approximately 450 staff will be eligible to switch to permanent TSB as part of the agreement. The final number of roles will be confirmed at the end of the agreement.
NatWest said closing of the deal is expected to occur in phases between the fourth quarter of 2022 and the first quarter of 2023.
The bank previously announced an agreement to sell the majority of Ulster Bank Ireland’s commercial loans to Allied Irish Banks. As a result of the standing deal, Ulster Bank Ireland has now entered into binding agreements for around 58% of its total gross loan portfolio and around 65% of its risk-weighted assets, as of June 30.
Chief Executive Officer Alison Rose said: âToday’s announcement is a key milestone in our phasing out from the Republic of Ireland.
âOur priority is to support our clients and colleagues throughout this transition and to work closely with the permanent TSB to ensure the success of this agreement. ”
NatWest Group shares closed down 1.5p to 222.1p.
NatWest reiterated that it expects its gradual withdrawal from the Republic of Ireland to be capital accretive.