‘No need to panic’: How will the Ulster Bank wind down affect customers?

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The bank will be wound down gradually over the next few years.

CUSTOMERS HAVE BEEN advised not to panic after it emerged that Ulster Bank is leaving the Irish market.

The bank will be wound down gradually over the next few years.

Since last September, it’s been public knowledge that the UK bank NatWest was mulling an exit from the market in the 26 counties.

A strategic review undertaken by Ulster Bank’s British parent has now paved the way for a gradual wind-down of the bank’s 88 branches in the Republic, where some 2,800 jobs are affected.

Bank management has stressed that customers will be largely unaffected by the move.

People’s savings are protected, and the terms and conditions of mortgages will not change even if the loan book of the bank is sold on.

Savings are also protected by the Deposit Guarantee Scheme which covers up to €100,000 per person, per account.

Ulster Bank tracker mortgage customers have been advised to do nothing, as whoever buys the tracker mortgage book will have to honour the tracker rate, but holders of non-tracker mortgages should consider switching to get better conditions.

Speaking on RTÉ’s Morning Ireland, Ulster Bank CEO Jane Howard reassured customers that there will be no immediate change to their banking.

“The first thing that’s really important is there’s no change right now and nobody needs to take any action.

“Our priority and our preference is absolutely to work with the full service banks. And that’s why we’ve announced the memorandum of understanding this morning, and the discussions that we’re in with Permanent TSB and others. That is absolutely our preference and our priority,” Howard said.

AIB and Permanent TSB

Ulster Bank confirmed this morning that AIB has signed a “non-binding memorandum of understanding” in relation to a €4 billion portfolio of commercial loans.

Permanent TSB is reportedly seeking to buy Ulster Bank’s small business lending portfolio and a portion of its mortgage book.

Customers don’t need to switch banks, but can if they want to.

Eoin Clarke, Managing Director of Switcher.ie, said it’s “understandable if consumers want to make a quick exit and switch away from Ulster Bank as soon as possible, but there’s no need to panic”.

“If you have a current account you should be able to switch to a new provider easily and any savings held with Ulster Bank will continue to be safe with the bank until you choose to move them.”

Mortgages

One of the key questions is what will happen to Ulster Bank’s mortgage book.

Vulture fund Cerberus is reportedly in the mix and although Ulster Bank last year denied that it was in talks with the fund, the prospect of the US-anchored private equity firm taking control of thousands of Irish home loans is a possibility.

Cerberus’ controversial tenure in Ireland over the past decade has been characterised by aggressive repossession and recovery tactics.

Speaking in the Dáil yesterday, Sinn Féin finance spokesperson said a sale of Ulster Bank’s mortgage book to Cerberus would be “an unacceptable outcome for homeowners” that “must be avoided at all costs”.

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Finance Minister Paschal Donohoe told Morning Ireland he “can’t stop an international bank making a decision about their presence here in Ireland” and ” also can’t mandate other banks to behave in different ways or stop banks from who they engage with”.

“There are two things that I can do, however, firstly, make sure that we have the right safeguards and protections in place within our country that try to get the balance right between protecting the needs of our citizens, and also having a viable banking sector that can meet the needs of our economy,” Donohoe said.

“And then the other thing that we can do is when transactions do take place that do involve the sale of loans books, that we have a really good legal framework in place that ensures that the protection that loan owners have travel with them if sales do happen. And that is what we have here in Ireland.”

Donoghue added that Ireland has an independent banking regulator and clear banking policy, and within that framework, the possibilities “could yet be positive for existing banks”.

With reporting by Ian Curran

A man wearing a face mask as he passes an Ulster Bank branch in Dublin this morning.

A man wearing a face mask as he passes an Ulster Bank branch in Dublin this morning.

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