Permanent TSB to Receive €7.6 Billion in Loans From Ulster Bank

July 23, 2021
Makayla Santino

As Ulster Bank continues in its exit from the Irish market, more of its plans have been announced. Ulster Bank is planning on transferring €7.6 billion of performing mortgages and other micro business loans to Permanent TSB whose current CEO is Eamonn Crowley. Additionally, 25 branches will go to Permanent TSB, though their actual transfer is not anticipated to occur until summer of next year.

The deal in place progresses a different plan that had originally been defined in late February 2021. This occurred when NatWest-owned Ulster Bank negotiated to move €4.2 billion of its commercial loans to Allied Irish Banks (AIB). The first agreement with Permanent TSB was also established at this time.The newest deal revealed entails that NatWest, which is 55 percent-owned by the British government, will take a share of up to 20 percent in Permanent TSB. 

Ireland’s government will not be infusing any new money towards the transfers, meaning that it will weaken its previously-established 75 percent stake in the bank. Permanent TSB’s portion of mortgages will increase from 15 percent to over 20 percent as banking in Ireland continues to become more consolidated. 

Another prominent bank KBC Ireland had also announced plans to exit the Irish market at around the same time as Ulster Bank. This announcement will work for the benefit of the Bank of Ireland because it will be receiving the majority of KBC’s loans. 

Ulster Bank had a total loan book that amounted to €20.5 billion in Ireland. Currently, there is still €8.9 billion of loans that are undecided in terms of where they will be allocated. 

These loans encompass €1.5 billion in household and commercial loans and €7 billion in performing tracker mortgages that potentially could be transferred to AIB. Many mortgage brokers are under the impression that the €1.5 billion in non-performing loans will be sold to a vulture fund because that is typically what happens in these situations. 

Ireland has retained the highest mortgage rate found in the eurozone for a long while. The consolidation of the market may lead to even worse conditions for customers.

Of the 2,800 members of Ulster Bank’s employees, up to 500 positions will be moved to Permanent TSB. A statement about these job transfers has been made by the Financial Services Union. It stated that it is hopeful there will be additional jobs from Ulster Bank that will be protected in impending loan transfers. Nevertheless, it acknowledged that the larger picture is of the consolidation of banking in Ireland and the repercussions consumers will face as a result.

 

 

Reference:

Quinn, Eamon. “Ulster Bank Advances Exit With Plan to Transfer €7.6bn in Loans to PTSB.” Irish Examiner, 23 July 2021, https://www.irishexaminer.com/business/companies/arid-40344197.html.

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