UK Govt would like Ireland to buy Ulster Bank?

Scofflaw

The Treasury is reportedly considering trying to persuade the Irish government to take control of Ulster Bank.

Ulster is part of the RBS Group, which is largely owned by the UK taxpayer.

RBS's future is being considered by the Parliamentary Commission on Banking Standards.

The BBC's business editor Robert Peston said that a draft report from the commission called for the split of RBS into a good bank and a bad bank.

However, he added that "another, more radical option is also being assessed by the Treasury".

That would involve somehow removing Ulster Bank from RBS Group - Ulster has been the worst performing part of the group, dragging down its overall performance.

Mr Peston said that one idea raised is to "transfer Ulster Bank into the arms and ownership of the Irish government", by swapping all or part of the bank for the British loans and investments currently owned by Ireland's "bad bank", the National Asset Management Agency (Nama).

http://www.bbc.co.uk/news/uk-northern-ireland-22766801

I can't see this one being a runner - the government would then own almost entirely the loss-making Irish banking sector, plus, as far as I know, the UK part of the NAMA portfolio is the best bit.

cordially,
Scofflaw

Cody Pomeray

It makes sense if it's a logistical swap, designed to cut down on the cost of administration and legal services in either country.

I have no idea what's in NAMA, but on the face of it there seems as though there may be some pragmatism and mutual benefit attached. The government's response if any will be interesting.

everdead.ie

Scofflaw wrote: »

http://www.bbc.co.uk/news/uk-northern-ireland-22766801

I can't see this one being a runner - the government would then own almost entirely the loss-making Irish banking sector, plus, as far as I know, the UK part of the NAMA portfolio is the best bit.

cordially,
Scofflaw

Realistically Ulster Bank would have to be given to us for free so in reality any loan write downs would be paper losses only. As far as I know The UK Loan book has been the easiest for Nama to sell off and raise Capital from.

Bullseye1

The last thing this country needs is another state owned bank. No thanks.

nadia88

First Ulster Bank, then the six counties.

Farmer Pudsey

nadia88 wrote: »

First Ulster Bank, then the six counties.

Do we want either. Maybe we should hand the whole lot back to the UK and apologise for the mess we made of it.

gaius c

Scofflaw wrote: »

http://www.bbc.co.uk/news/uk-northern-ireland-22766801

I can't see this one being a runner - the government would then own almost entirely the loss-making Irish banking sector, plus, as far as I know, the UK part of the NAMA portfolio is the best bit.

cordially,
Scofflaw

We've seen how bank whinging got An Post neutered so if Ulster Bank were seen as a threat to the precarious balancing act the state supported banks are engaging in (by virtue of the fact that they might actually act like a bank and start repossessing if not bought out), then the state paying good money to remove this "threat" would make sense in a Colonel Kilgore kind of way.

Layinghen

Of course the UK government want to get Ulster Bank off its hands. I hope our crowd aren't daft enough to take it. Let us try and deal with the mess we have with Irish owned banks before taking on anymore problems.

zl1whqvjs75cdy

Whatever the benefits of it (I have no clue) I really doubt this will happen. The media will be baying for blood and you know the headlines would be "Government uses your tax to buy bad bank while cutting dole and wages etc." A non runner unless Enda and co enjoy being lynched.

gaius c

Miguel Harsh Sidearm wrote: »

Whatever the benefits of it (I have no clue) I really doubt this will happen. The media will be baying for blood and you know the headlines would be "Government uses your tax to buy bad bank while cutting dole and wages etc." A non runner unless Enda and co enjoy being lynched.

In reality, we wouldn't be buying it. They'd pay us to take it off their hands or swap their trash for our trash.

coolshannagh28

Remember the UK contribution to our bailout which raised eyebrows ,quid pro quo?

Scofflaw

coolshannagh28 wrote: »

Remember the UK contribution to our bailout which raised eyebrows ,quid pro quo?

That was more of an acknowledgement of the importance to the UK of Ireland as a market, and indeed as a hunting ground for their banks.

cordially,
Scofflaw

Are there any Irish or other financial institutions that might take on Ulster Bank for the right price?

Sand

I can only see the Irish government doing this for negative purposes - to attempt to run down a rival to the "pillar banks". It doesn't make any sense whatsoever on a wider strategic level for the Irish people/Irish state but that doesn't mean the morons at the DoF wont think its a good idea regardless.

Fratton Fred

gaius c wrote: »

We've seen how bank whinging got An Post neutered so if Ulster Bank were seen as a threat to the precarious balancing act the state supported banks are engaging in (by virtue of the fact that they might actually act like a bank and start repossessing if not bought out), then the state paying good money to remove this "threat" would make sense in a Colonel Kilgore kind of way.

That's the only benefit I can see.

Ulster bank is one of the things preventing the RBS sell off at the moment, so there could be a temptation to cut and run, repossessing property and holding a fire sale which would destroy any value in the NAMA Irish portfolio.

no one in their right mind would buy it, it won't turn a profit again in my lifetime.

Bullseye1

coolshannagh28 wrote: »

Remember the UK contribution to our bailout which raised eyebrows ,quid pro quo?

Remember the UK contribution to the creation of 100-110% mortgages.

antoobrien

gaius c wrote: »

We've seen how bank whinging got An Post neutered

That's not actually true, seeing as the state savings schemes only total about €800m out of approx €92bn household deposits (and about another €70bn commercial). The problem with the An Post & NTMA schemes for the government is that they are registered as government debt, so An Post was neutered to stop deposit savings from becoming government debt instead of bank capital - something they happen to need. The An Post case is merely one where the banks and government interests aligned.

draiochtanois

This post has been deleted.

jmayo

Scofflaw wrote: »

http://www.bbc.co.uk/news/uk-northern-ireland-22766801

I can't see this one being a runner - the government would then own almost entirely the loss-making Irish banking sector, plus, as far as I know, the UK part of the NAMA portfolio is the best bit.

cordially,
Scofflaw

Oh FFS.
Who in their right mind would contenance adding to our portfolio of sh**e financial institutions.
Oh wait a minute haven't we still got mostly the same wizards employed in the Dept of Finance as the ones who couldn't see their ar** from their elbow all the way through the bubble, the bank guarantee and the Troika bailout.

At least we hope the current government aren't as idiotic, or beholden, as their predecessors.

BTW our only hope for a proper banking system in the future is if we have some banks outside the control of our state.
The last thing the consumers and indeed taxpayers should ever want is the likes of Rabo, NIB and Ulster to be taken over by us or leave the market entirely.

gaius c wrote: »

We've seen how bank whinging got An Post neutered so if Ulster Bank were seen as a threat to the precarious balancing act the state supported banks are engaging in (by virtue of the fact that they might actually act like a bank and start repossessing if not bought out), then the state paying good money to remove this "threat" would make sense in a Colonel Kilgore kind of way.

That would be a worry and is probably what some mandarins within the heirarchy are actually thinking.

Scofflaw wrote: »

That was more of an acknowledgement of the importance to the UK of Ireland as a market, and indeed as a hunting ground for their banks.

cordially,
Scofflaw

Are you shure it wasn't their exposure they were worried about ?

Granted they do, or at least they did, sell more to us than to India, China and Brazil combined.

Fratton Fred

draiochtanois wrote: »

wrong

it was due to the amount loaned by UK banks to Irish banks

48 billion stg if I recall correctly, there was a FT article about it, it's in their archive if you have access

According to the Daily Mail, at the time of the bailout, the UK's exposure was 88bn mainly due to Ulsterbank's 53bn debt book and Lloyds 27bn in commercial loans. So basically lending to Irish business and private home owners.

http://www.dailymail.co.uk/news/article-1330417/UK-needs-Dublin-bailout-Britains-banks-owed-88BILLION-Ireland.html

the reason is less conspiratorial and more practical. Where do you think all those Nissan Qashqais, Toyota Avensis and Range Rovers are made?

draiochtanois

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draiochtanois

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Scofflaw

draiochtanois wrote: »

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Yes:

Scofflaw wrote:

and indeed as a hunting ground for their banks.

cordially,
Scofflaw

Fratton Fred

draiochtanois wrote: »

To clarify, I'm saying the UK government contributed to the Irish bailout because if we had gone bust their banks would have suffered contagion due to their massive exposure to Irish banks - so they would have had to bail them out to an even greater degree. It was prudent for them to contribute, it has little or nothing to do with Ireland as a market for UK goods

If you consider Ulsterbank and HBoS Irish banks, then yes. But Ireland is worth £29bn a year to the UK economy in general, but is crucial to NI. It was more than just a panic over banks. The Irish economy creates jobs in the UK (and creates huge immigration when it goes tits up).

draiochtanois

This post has been deleted.

Fratton Fred

draiochtanois wrote: »

I think we are all in agreement that it was altruism on the part of our neighbour :-)

Has any element of the bailout been anything but?

everdead.ie

What's more aren't the UK making a profit of their loan to us they borrowed the money at 3.5% and then loaned it on to us at 5%?

Certainly it was political and demonstrates the size of our contribution toward the UKs trade.

In any case I don't think Cameron could actually sell Ulset Bank at a price that would be acceptable to his government and ours.

gaius c

Edna has met Ulster Bank.
It's a done deal at this stage I'd say.

gaius c

And a link for that previous post.
http://m.brne.ws/business/kenny-unaware-of-ulster-bank-split-proposal-596578.html

Rightwing

Deleted User wrote: »

Are there any Irish or other financial institutions that might take on Ulster Bank for the right price?

It wouldn't surprise me if a 3rd party took them over. The losses are accounted for now, prudent long term acquisition.

Rightwing

everdead.ie wrote: »

What's more aren't the UK making a profit of their loan to us they borrowed the money at 3.5% and then loaned it on to us at 5%?

Certainly it was political and demonstrates the size of our contribution toward the UKs trade.

In any case I don't think Cameron could actually sell Ulset Bank at a price that would be acceptable to his government and ours.

No, the UK is offering us the interest rate they got the loan at themselves. That was nothing more than a favour to us.

everdead.ie

Rightwing wrote: »

No, the UK is offering us the interest rate they got the loan at themselves. That was nothing more than a favour to us.

Oh right interesting I guess Dara O'Brien isn't the best source of information

Cody Pomeray

gaius c wrote: »

Edna has met Ulster Bank.
It's a done deal at this stage I'd say.

He met representatives of the bank last week; the British parliamentary draft report only emerged early this week.

Rightwing

everdead.ie wrote: »

Oh right interesting I guess Dara O'Brien isn't the best source of information

http://www.independent.ie/business/irish/uk-slashes-its-interest-rate-on-our-7bn-bailout-loans-26863834.html

Under the new pricing the UK will charge Ireland just 0.18pc above its own borrowing costs for the bailout loans, and the new rate applies to all past and future loans.
Under the original structure of the UK deal, repayments were calculated by adding 2.29pc to a formula known as the sterling seven-and-a-half-year swap rate -- meaning an interest rate of 4.5pc.
The new formula will be based on the average yield on UK government debt in the six months before a loan is made, plus the 0.18pc charge.
The UK has seen its borrowing costs plunge in recent months as investors flee the eurozone and opt to lend to countries including the UK that are not part of the common currency.

Cody Pomeray

Rightwing wrote: »

The UK has seen its borrowing costs plunge in recent months as investors flee the eurozone and opt to lend to countries including the UK that are not part of the common currency.

A lot of swings and roundabouts really, but if you insist on making this claim, then you should find that the benchmark UK cost of borrowing is up 2% on this time last year; it is now at a 12 week high. You may be confusing falling prices with rising yields.

On the other hand, Germany's cost of borrowing has increased to a lesser extent, and the cost of borrowing has reduced for Italy, Spain, France, Portugal, Ireland and Greece, in some cases substantially.

The UK costs of borrowing have visibly not "plunged".

Rightwing

Cody Pomeray wrote: »

A lot of swings and roundabouts really, but if you insist on making this claim, then you should find that the benchmark UK cost of borrowing is up 2% on this time last year; it is now at a 12 week high. You may be confusing falling prices with rising yields.

On the other hand, Germany's cost of borrowing has increased to a lesser extent, and the cost of borrowing has reduced for Italy, Spain, France, Portugal, Ireland and Greece, in some cases substantially.

The UK costs of borrowing have visibly not "plunged".

I don't 'insist' on making any claim - it's taken from the article I posted showing that UK are not charging us 2-3% extra interest. The article is about a year old.

Cody Pomeray

It's considerably out-dated information. It's bad form not to use quotation marks, let alone the fact that the information is from 2012.

Rightwing

Cody Pomeray wrote: »

It's considerably out-dated information. It's bad form not to use quotation marks, let alone the fact that the information is from 2012.

It's essentially information taken from the link posted.

Hope that helps.

Rightwing

Looks like RBS have no intention of selling off Ulster Bank, makes sense to me, the time to do that was about 5 years ago.

http://www.independent.ie/business/irish/rbs-chief-hester-says-group-has-no-plans-to-sell-off-ulster-bank-29324180.html

THE chief executive of Royal Bank of Scotland (RBS) says his bank has no plan to sell Ulster Bank.
The 100pc-owned Irish unit of RBS is part of the "core" RBS bank, Stephen Hester said in a long interview with the Irish Independent.
RBS has been forced to pump almost £14.3bn (€16.8bn) into Ulster Bank to cope with losses on boomtime lending, prompting speculation that the parent could pull out of Ireland altogether rather than keep ploughing in fresh capital.
That speculation was fuelled further this week by reports that the UK Treasury could ask the government here to take over Ulster Bank.
However, in a frank response to the question, Stephen Hester said pulling out of Ulster Bank has never made financial sense.
"Keeping Ulster Bank was always 'Plan A.' Of course we looked at alternatives, but there has never been a moment in the last five years when leaving Ireland was the preferred option," he said.

View

Rightwing wrote: »

Under the new pricing the UK will charge Ireland just 0.18pc above its own borrowing costs for the bailout loans, and the new rate applies to all past and future loans.
Under the original structure of the UK deal, repayments were calculated by adding 2.29pc to a formula known as the sterling seven-and-a-half-year swap rate -- meaning an interest rate of 4.5pc.

Neither of those formulae mean the UK is charging Ireland the same as it costs them to borrow the monies they are loaning us as they are charging a "service charge" on top of the rate they are paying in both cases.

While the reduced rate was and is welcome it seems to have come about as a direct response to the Eurozone making a decision to reduce what they were charging us. As such, neither UK decision was a "charitable donation" but would appear to fit into a larger EU process by both the Eurozone and non-Eurozone states, without which we would be paying considerably more to borrow from "the markets" presuming we could borrow at affordable rates at all.

everdead.ie

I see that the times in Britain is running with the story that because Ulster bank has accounted for 10 billion pounds in losses since 2010 it equates to a back door bailout of Ireland.

I suppose the difficulty with that is it is part of a British Banking group (RBS) which didn't really have a choice in the matter they either let it fail or they kept it going to try and recoup some of the losses.

This quote in particular from an Irish article is telling.

The lender, acquired by RBS in 2000, doubled its assets to £55bn in the four years before Ireland’s property bubble burst, according to a report published in 2011 by the UK Financial Services Authority. While Ulster Bank accounted for only 3% of RBS’s assets in 2007, it has generated almost €13bn of bad loan losses, filings show.

http://www.irishexaminer.com/business/features/rbs-pays-heavily-for-ulster-bank-bailout-227538.html

Dannyboy83

The impression I had from this forum was that most of our bank bailout money went not to France or Germany but to London.

Surely by their logic, they owe us a few quid?

Dampintheattic

everdead.ie wrote: »

I see that the times in Britain is running with the story that because Ulster bank has accounted for 10 billion pounds in losses since 2010 it equates to a back door bailout of Ireland.



This quote in particular from an Irish article is telling.


http://www.irishexaminer.com/business/features/rbs-pays-heavily-for-ulster-bank-bailout-227538.html

Revenge for Skibbereen

everdead.ie

Dannyboy83 wrote: »

The impression I had from this forum was that most of our bank bailout money went not to France or Germany but to London.

Surely by their logic, they owe us a few quid?

Actually the logic as far as I can tell is completely flawed and very strange given it sounds like a headline from the sun that will just cause xenophobia against the Irish.

They call funds given to Ulster bank a bailout despite the fact that without these funds it would have gone bankrupt causing RBS to loose significantly more.

The money also would have just gone out on bonds it owed to other banks they certainly didn't give any money out to it's customers.

By their logic their is also the fact that given the losses sustained by Irish banks on their British loans and our bailout of those banks we have given a significant bailout to the UK.

In particular the 30% haircut Irish banks had to take on the loans given to nama.

which were in the region of 1/3rd of the total 88 billion in loans so just about 29.33 billion which if you take the 70% value they received for those loans they would of lost 8.8 billion on their British loan books.

While the UK accounts for just one-third of Nama's assets it has generated almost four-fifths of the total sale proceeds since the bad bank was first established in 2009

(Even though it has been easier to sell the UK properties Irish banks still lost money selling them to Nama)

30% haircut number I got from wiki but I am pretty sure it is right.


They also still have signifcant exposure to the Market BOI in particular.

At the end of last year Bank of Ireland had a UK loan book of €51bn, AIB had an €8.3bn UK loan book, Permanent TSB had €7.7bn of British loans on its balance sheet while who knows what treasures lie buried in IBRC, which houses the loans of Anglo and Nationwide?

Source http://www.independent.ie/business/dan-white-osborne-needs-ulster-deal-for-rbs-sale-but-can-we-help-29330832.html

Fratton Fred

everdead.ie wrote: »

Actually the logic as far as I can tell is completely flawed and very strange given it sounds like a headline from the sun that will just cause xenophobia against the Irish.

They call funds given to Ulster bank a bailout despite the fact that without these funds it would have gone bankrupt causing RBS to loose significantly more.

The money also would have just gone out on bonds it owed to other banks they certainly didn't give any money out to it's customers.

By their logic their is also the fact that given the losses sustained by Irish banks on their British loans and our bailout of those banks we have given a significant bailout to the UK.

In particular the 30% haircut Irish banks had to take on the loans given to nama.

which were in the region of 1/3rd of the total 88 billion in loans so just about 29.33 billion which if you take the 70% value they received for those loans they would of lost 8.8 billion on their British loan books.
(Even though it has been easier to sell the UK properties Irish banks still lost money selling them to Nama)

30% haircut number I got from wiki but I am pretty sure it is right.


They also still have signifcant exposure to the Market BOI in particular.



Source http://www.independent.ie/business/dan-white-osborne-needs-ulster-deal-for-rbs-sale-but-can-we-help-29330832.html

Calling it a back door bailout is a bit Daily Mailish, but I don't think you are comparing like for like there.

The RBS funding was to cover bad debt against loans made to Irish investors in Ireland. A lot of the BoI etc debt in the UK was made to Irish property developers who are now struggling.
http://m.guardian.co.uk/business/2011/jan/23/ireland-property-entrepreneurs-relinquish-london-trophies

There was an article in the Times I think talking of how these guys would look at properties in the morning, meet the bank over lunch and have the money available in the afternoon, this is what gave Anglo, AIB and BoI the reputation as the most reckless lenders in the UK in a report published ( and quickly retracted) by Merrill Lynch.

everdead.ie

Fratton Fred wrote: »

Calling it a back door bailout is a bit Daily Mailish, but I don't think you are comparing like for like there.

The RBS funding was to cover bad debt against loans made to Irish investors in Ireland. A lot of the BoI etc debt in the UK was made to Irish property developers who are now struggling.
http://m.guardian.co.uk/business/2011/jan/23/ireland-property-entrepreneurs-relinquish-london-trophies

There was an article in the Times I think talking of how these guys would look at properties in the morning, meet the bank over lunch and have the money available in the afternoon, this is what gave Anglo, AIB and BoI the reputation as the most reckless lenders in the UK in a report published ( and quickly retracted) by Merrill Lynch.

It's true that the Irish banks in the UK were even more reckless than they were in Ireland but I still think it doesn't stand up RBS is a British company with an Irish subsidiary which doubled it's loan book in four years and introduced the 100% mortgage leaving no gap for the houses to decrease in value.

If RBS had tried to wind down Ulster bank it could of ended up taking a much larger loss on the bank then again if it had sold it early enough or had decided to opt into Nama it could of actually deacresed the actual exposure the British Tax payer has had to pay.

It is a case of poor* management at Ulster Bank and RBS that allowed this to happen just as it was at Anglo, AIB,PTSB, BOI, NIB, KBC etc.

It is simply the responsibility of RBS to handle Ulster bank as it's parent company which is why the capital was injected into it and this is why the Loans in the UK are the responsibility of the Irish banks and now Nama.

The money never went to the Irish Government or the people so it is difficult to understand why a paper of such repute would try and sensationalise reckless banking as anything else.




*Probably needs a much stronger term than "poor"

mistermouse

Ulster Bank run quite a few branches in Northern Ireland too.

If their Parent company who it seems started quite a frenzy in Ireland with Mortgage offers, couldn't control their reckless lending then its hardly the Irish state's problem.

As I see it RBS and its sub bank Ulster, saw the Irish Market as a playground, RBS fuelled 100% mortgages and lost. If anything, not only do we owe Ulster Bank no favours but RBS owe Ireland at least an apology for fuelling the lending.

Out of all the problems with IT in that group, Ulster bank was also last to be sorted and the UK banks got priority

Its sour grapes in this case seeing how the government foolishly guaranteed Irish Banks

1966

Stephen Hester leaving RBS now ...... What's going on there??