Ulster Bank: why is Natwest closing down its operations in Ireland - and what does it mean for staff and customers?

Ulster Bank is pulling its operations from Ireland (Getty Images)

NatWest has announced that Ulster Bank will begin a phased withdrawal from the Irish market.

The group has said that it will try to minimise job losses, promising no new or compulsory job redundancies for Northern Ireland staff.

Two other Irish banks – Permanent TSB and AIB – have already made moves to potentially acquire Ulster Bank assets south of the border. The Irish Government is a majority stakeholder in both AIB and Permanent TSB.

Why is Ulster Bank leaving Ireland?

NatWest chief executive Alison Rose explained why it was withdrawing from the Republic of Ireland.

He said: “Following an extensive review and despite the progress that has been made, it has become clear Ulster Bank will not be able to generate sustainable long-term returns for our shareholders

He added: “As a result, we are to begin a phased withdrawal from the Republic of Ireland over the coming years which will be undertaken with careful consideration of the impact on customers and our colleagues.”

The announcement came as NatWest revealed that it made a pre-tax operating loss of £351 million in 2020.

Irish Finance Minister Paschal Donohoe highlighted the significance of the move.

He said: “The decision by NatWest, the parent of Ulster Bank, to exit the Irish market is a very significant event,” he said.

“After 160 years serving the Irish public, today marks a sad day. Our thoughts too are with the Ulster Bank staff as they learn of the closure of the bank here in Ireland.”

What will happen to assets?

The banks assets in Ireland are already the subject of interest from rival banks.

Permanent TSB and other banking interests are in talks with NatWest over the potential acquisition of Ulster Bank’s retail and SME assets, liabilities and operations.

NatWest has also signed a Memorandum of Understanding (MoU) with AIB over the purchase of Ulster Bank’s corporate and commercial loans.

What about customers and staff?

Mr Donohoe underlined that customers would be protected by the move.

He said: “Reassurance is also given to customers of Ulster Bank that robust consumer protections are in place in the event of the bank withdrawing from the Irish market, including the Central Bank’s codes of conduct and that the terms of any contract currently in place with Ulster Bank remains in place into the future.

Ulster Bank’s chief executive in the Republic, Jane Howard, said that no branches will be closing this year.

“There’s never a good time to deliver news like this and I understand that it’s extremely disappointing news for both customers and colleagues,” she told RTE Morning Ireland.

“But now that the decision has been made, my focus and our focus will be on making sure that we complete this phased withdrawal over a number of years, in an orderly fashion, so that we do a good job for both customers and colleagues.

“What’s really important for today is there is no change right now, we’re continuing to offer a banking service, and no branches will be closing this year.

“(Customers) don’t need to take any action and we’ll be starting to communicate with our customers today.”

Uncertainty hangs over the safety of 2,800 Ulster Bank staff, however.

The Irish Labour Party’s finance spokesperson Ged Nash said: “This devastating news is a hammer blow for the 2,800 Ulster Bank staff, for their customers and for businesses across Ireland.

“My immediate thoughts and concerns are with the bank’s dedicated staff whose future is uncertain. Any sale or potential merger must respect the right of staff to have their existing terms and conditions transferred with them and compulsory redundancies should be off the table.”