We need your help now

Support from readers like you keeps The Journal open.

You are visiting us because we have something you value. Independent, unbiased news that tells the truth. Advertising revenue goes some way to support our mission, but this year it has not been enough.

If you've seen value in our reporting, please contribute what you can, so we can continue to produce accurate and meaningful journalism. For everyone who needs it.

Mark Stedman/Photocall Ireland
Bad Bank

Ulster Bank assets to be transferred to RBS 'bad bank'

The UK taxpayer rescued RBS says it will conduct a review of Ulster Bank “for supporting the Northern Irish and Irish economies”.

ULSTER BANK WILL have £9 billion of high-risk or non-performing assets managed within a new ‘bad bank’ following a UK Government review of its parent company the Royal Bank of Scotland.

The UK taxpayer rescued RBS will create an internal ‘bad bank’ to run down a total of £38 billion of high-risk assets and accelerate its return to the private sector.

RBS will also undertake a comprehensive review of Ulster Bank to “identify a sustainable business model for supporting the Northern Irish and Irish economies” which will report in February 2014.

The review says that analysts do not expect Ulster Bank’s cores business to break-even until 2015 at the earliest, and even from this point to generate only single-digit returns.

This has been driven by ongoing loan losses despite the transfer of £18 billion of low-quality lending to RBS’s non-core division.

Ulster Bank’s impairment charge represents 3.1 per cent of gross assets, which is ten times the loss rate suffered in the UK retail division and was substantially larger than Ulster’s income.

Impairment charges reflect the decline in potential profits from unrealised assets.

Bad bank

RBS hopes to remove all of the toxic assets, equivalent to $61 billion or €45 billion euros, from its balance sheet over the next three years, the bank said in a statement as it announced also a third-quarter net loss of £828 million.

The lender, 81 per cent owned by the British government after the world’s biggest banking bailout in the wake of the 2008 financial crisis, said it had decided against creating an external ‘bad bank’ owing to the risk and expense involved.

“Our goal is to remove between 55 per cent and 70 per cent of these assets over the next two years,” RBS chief executive Ross McEwan said in the statement.

Additional reporting by © – AFP

Read: Danske Bank Ireland to close for personal customers with loss of 150 jobs >

Read: Work to do on mortgage restructuring as long-term arrears remain high >

Readers like you are keeping these stories free for everyone...
A mix of advertising and supporting contributions helps keep paywalls away from valuable information like this article. Over 5,000 readers like you have already stepped up and support us with a monthly payment or a once-off donation.

Your Voice
Readers Comments
    Submit a report
    Please help us understand how this comment violates our community guidelines.
    Thank you for the feedback
    Your feedback has been sent to our team for review.