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Natwest considering closing Ulster Bank in the ROI

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    #92
    Timing belt
    Registered Users Posts: 3,408 ✭✭✭Timing belt


    Claw Hammer wrote: »
    2012 was the depths of the recession. They subsequently attempted to make a go of it. Now Covid has ruined the chances of making a go of it.

    Covid is not the reason for closing down/selling Ulster bank. It’s not profitable because of the amount of capital they need to hold since the 2008 crash. By closing it down NatWest will be able to get there hands on the capital and pay dividends which will boost the share price and if you read the Q3 presentation this is the banks main focus as it may allow the UK government (it’s largest shareholder) exit its holdings.


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    #93
    milout
    Registered Users Posts: 57 ✭✭milout


    I'm gutted to read they might be closing, their banking app is great, especially compared to the dire offering from BOI, even after their recent upgrade.

    Does anyone have a recommendation for an alternative current account that has a better app than BOI?


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    #94
    Claw Hammer
    Registered Users Posts: 6,163 ✭✭✭Claw Hammer


    Timing belt wrote: »
    Covid is not the reason for closing down/selling Ulster bank. It’s not profitable because of the amount of capital they need to hold since the 2008 crash. By closing it down NatWest will be able to get there hands on the capital and pay dividends which will boost the share price and if you read the Q3 presentation this is the banks main focus as it may allow the UK government (it’s largest shareholder) exit its holdings.

    Covid has ruined the organic growth model. If it had been making money in the Republic, Nat West would have less incentive to wind it up. They might have done it anyway, but Covid has made it much more pressing.


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    #95
    Belt
    Registered Users Posts: 146 ✭✭Belt


    milout wrote: »
    I'm gutted to read they might be closing, their banking app is great, especially compared to the dire offering from BOI, even after their recent upgrade.

    Does anyone have a recommendation for an alternative current account that has a better app than BOI?

    Not sure how it compares to BOI, but I find KBC's app good and easy to use. It has your current and deposit accounts and credit cards all in one place. No fees on the current a/c if you're lodging greater than €2,500 a month


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    #96
    loyatemu
    Registered Users Posts: 14,777 ✭✭✭✭loyatemu


    AIB's app is also fine (I have both UB and AIB on my phone).


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    #97
    Claw Hammer
    Registered Users Posts: 6,163 ✭✭✭Claw Hammer


    Belt wrote: »
    Not sure how it compares to BOI, but I find KBC's app good and easy to use. It has your current and deposit accounts and credit cards all in one place. No fees on the current a/c if you're lodging greater than €2,500 a month

    KBCs app is only good on a phone, dreadful on a PC.


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    #98
    JTMan
    Registered Users Posts: 5,537 ✭✭✭JTMan


    The language that the Central Bank of Ireland are using about Ulster Bank adds further weight that a closure announcement is coming.

    - At least 2 months notice will be provided.
    - All outstanding transactions must be concluded.
    - CBI is having "regular and intensive engagement with Ulster Bank".

    I suspect that Natwest (that are 62% UK government owned) want to get their timing right, now is not the right time to upset people, I would guess that they are waiting until post Brexit/FTA before making the closure announcement.


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    #99
    kevthegaff
    Registered Users Posts: 6,883 ✭✭✭kevthegaff


    I have business loans with ulster bank, will It just be transferred to another bank?


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    #100
    Timing belt
    Registered Users Posts: 3,408 ✭✭✭Timing belt


    JTMan wrote: »
    The language that the Central Bank of Ireland are using about Ulster Bank adds further weight that a closure announcement is coming.

    - At least 2 months notice will be provided.
    - All outstanding transactions must be concluded.
    - CBI is having "regular and intensive engagement with Ulster Bank".

    I suspect that Natwest (that are 62% UK government owned) want to get their timing right, now is not the right time to upset people, I would guess that they are waiting until post Brexit/FTA before making the closure announcement.

    Just because it is 62% uk gov owned will have little impact on any decision.


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    #101
    Charles Babbage
    Registered Users Posts: 5,490 ✭✭✭Charles Babbage


    It is disappointing that 100 years after partition if the Ulster bank is closed in the ROI by the British government, when that partition probably won't last a further decade and trade within the island will likely increase significantly following Brexit.


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    #102
    Timing belt
    Registered Users Posts: 3,408 ✭✭✭Timing belt


    Charles Babbage wrote: »
    It is disappointing that 100 years after partition if the Ulster bank is closed in the ROI by the British government, when that partition probably won't last a further decade and trade within the island will likely increase significantly following Brexit.

    It’s not a political decision it’s a business decision based on a company that has capital trapped from the financial crisis due to the risks it took.

    The UK government has very little say in the matter just look at the level of job cuts in the NatWest due to outsourcing jobs to country with cheaper labour. This was a commercial decision that took jobs out of the UK.


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    #103
    Timing belt
    Registered Users Posts: 3,408 ✭✭✭Timing belt


    kevthegaff wrote: »
    I have business loans with ulster bank, will It just be transferred to another bank?

    It will be transferred to whoever would buy the loan book on the exact same terms. In all likelihood it would be taken over by a fund that would buy it at a big discount.


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    #104
    Arthur Daley
    Registered Users Posts: 4,451 ✭✭✭Arthur Daley


    So let's step back here.

    In order to free up capital trapped, they would sell their Books off at a big discount? Not sure how that works

    While elsewhere today, we are told the overall economy is booming, despite localised difficulties that we know about like tourism and hospitality decimated. And then we have a WTO rules Brexit potentially hitting Ireland. A lot of mixed messages anyway, personally I think I'd stick rather than twist.


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    #105
    silver2020
    Registered Users Posts: 2,045 ✭✭✭silver2020


    Charles Babbage wrote: »
    It is disappointing that 100 years after partition if the Ulster bank is closed in the ROI by the British government, when that partition probably won't last a further decade and trade within the island will likely increase significantly following Brexit.

    Its a simple business decision. They have been losing money, they have to have higher capital reserves, they have legacy bad loans. they have cost the British tax payer £15 BILLION of which less than 5 Billion has been repaid (Bank of Ireland and AIB have paid most of their bailout loans back to the Irish exchequer)

    Unless then can see decent ongoing profits, its simply not worth staying.

    If at some stage in the next 30 years Northern Ireland leaves the United Kingdom and becomes part of the Republic, the Norther Irish arm will become part of the banking system here and will be able to simply open new branches if it wishes without setting up a separate entity.


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    #106
    Timing belt
    Registered Users Posts: 3,408 ✭✭✭Timing belt


    Arthur Daley wrote: »
    So let's step back here.

    In order to free up capital trapped, they would sell their Books off at a big discount? Not sure how that works

    While elsewhere today, we are told the overall economy is booming, despite localised difficulties that we know about like tourism and hospitality decimated. And then we have a WTO rules Brexit potentially hitting Ireland. A lot of mixed messages anyway, personally I think I'd stick rather than twist.

    It’s simple Ulster bank is not profitable enough to pay a return on the investment that NatWest made in them following the financial crisis. And are likely to never be able to repay them so instead the will sell loan books and take 50p on the pound.


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    #107
    Exclamation Marc
    Registered Users Posts: 11,352 ✭✭✭✭Exclamation Marc


    Arthur Daley wrote: »
    So let's step back here.

    In order to free up capital trapped, they would sell their Books off at a big discount? Not sure how that works

    Because to a cash strapped entity, getting (for example) 50% of what's due over the next 35 years up front rather than getting 85% (assuming defaults etc) of what's due over 35 years is a significantly good result.


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    #108
    Arthur Daley
    Registered Users Posts: 4,451 ✭✭✭Arthur Daley


    Timing belt wrote: »
    It’s simple Ulster bank is not profitable enough to pay a return on the investment that NatWest made in them following the financial crisis. And are likely to never be able to repay them so instead the will sell loan books and take 50p on the pound.

    But does this not destroy the Capital they put in to date. So it is far from freeing up capital, it is decimating (well halving it).

    Considering the growth in the Irish economy every year, there seems little business rationale to be offering people money at 50p in the pound.


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    #109
    Arthur Daley
    Registered Users Posts: 4,451 ✭✭✭Arthur Daley


    Exclamation Marc wrote: »
    Because to a cash strapped entity, getting (for example) 50% of what's due over the next 35 years up front rather than getting 85% (assuming defaults etc) of what's due over 35 years is a significantly good result.

    But the Banks aren't cash strapped, they are awash with liquidity.


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    #110
    Timing belt
    Registered Users Posts: 3,408 ✭✭✭Timing belt


    Arthur Daley wrote: »
    But does this not destroy the Capital they put in to date. So it is far from freeing up capital, it is decimating (well halving it).

    Considering the growth in the Irish economy every year, there seems little business rationale to be offering people money at 50p in the pound.

    the option is 50% or 0% so that is the rationale. The cost income ratio is 95% even after all the cost cutting they undertook. So even if the irish economy grows they are not making money. Add on a low interest rate environment for the foreseeable future means that every bank will struggle to return a profit despite what happens in the economy.


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    #111
    Arthur Daley
    Registered Users Posts: 4,451 ✭✭✭Arthur Daley


    Timing belt wrote: »
    the option is 50% or 0% so that is the rationale. The cost income ratio is 95% even after all the cost cutting they undertook. So even if the irish economy grows they are not making money. Add on too a low interest rate environment for the foreseeable future means that every bank will struggle to return a profit despite what happens in the economy.

    Yeah, it's a strange one.

    I'd take no profit over crystallising massive losses on the capital invested. Especially in the backdrop of a growing economy, any defaults are likely to be isolated surely. I mean what's in it for this fund that buys it up at 50p in the pound, they must see some upside.


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    #112
    Timing belt
    Registered Users Posts: 3,408 ✭✭✭Timing belt


    Arthur Daley wrote: »
    Yeah, it's a strange one.

    I'd take no profit over crystallising massive losses on the capital invested. I mean what's in it for this fund that buys it up at 50p in the pound, they must see some upside.

    The funds will probably package up the debt and sell on via a securitisation and make a return. Plus if they wait 35 years and say 85% of loans are repaid allowing for defaults etc. They will make 35% profit because of the discount. If NatWest held on for 35 years they would make a loss of 15% in this example.


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    #113
    Arthur Daley
    Registered Users Posts: 4,451 ✭✭✭Arthur Daley


    Timing belt wrote: »
    The funds will probably package up the debt and sell on via a securitisation and make a return. Plus if they wait 35 years and say 85% of loans are repaid allowing for defaults etc. They will make 35% profit because of the discount. If NatWest held on for 35 years they would make a loss of 15% in this example.


    But the 'loss' would have already been included in the Govt. bailout when they injected the Capital in the first place. So it is kind of like a sunk cost, and irrelevant to the future decisions.

    Unless we are into socialise the losses and privatise the gains, which this fund I'm sure would go for, but may not be in the interests of UK taxpayers.

    Plus it assumed no more upside, while we've obviously seen a very substantial upside in markets since 2013, and the economy is growing.

    This capital put into the Bank would be in there probably 10 or 12 years, the losses would have already have been reported to the market, and the bailout money would be financed at close to zero interest rates on Sovereign debt.


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    #114
    Timing belt
    Registered Users Posts: 3,408 ✭✭✭Timing belt


    Arthur Daley wrote: »
    But the 'loss' would have already been included in the Govt. bailout when they injected the Capital in the first place. So it is kind of like a sunk cost, and irrelevant to the future decisions.

    Unless we are into socialise the losses and privatise the gains, which this fund I'm sure would go for, but may not be in the interests of UK taxpayers.

    Plus it assumed no more upside, while we've obviously seen a very substantial upside in markets since 2013, and the economy is growing.

    This capital put into the Bank would be in there probably 10 or 12 years, the losses would have already have been reported to the market, and the bailout money would be financed at close to zero interest rates on Sovereign debt.

    The capital was put into the bank 12 year’s ago and despite a growing economy during the time the investment showed a zero return. The question for NatWest is do they continue for another 10 years when it it will be more difficult to get a return due to the low rate environment or do they cash out and use the money elsewhere in the bank that is making money. To be honest it is a no brainier.


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    #115
    Arthur Daley
    Registered Users Posts: 4,451 ✭✭✭Arthur Daley


    Timing belt wrote: »
    The capital was put into the bank 12 year’s ago and despite a growing economy during the time the investment showed a zero return. The question for NatWest is do they continue for another 10 years when it it will be more difficult to get a return due to the low rate environment or do they cash out and use the money elsewhere in the bank that is making money. To be honest it is a no brainier.

    It's probably also best to understand that when these banks today report numbers for say 2018 or 2019, these are 'core' numbers. They reflect the go ahead business without the bad loans offloaded to Nama or UK equivalent. So when we assume that the bank is making no return we presumably base this off what we see reported in the financial press (the core or good business). From what I can see their issue is with this business specifically.

    Information about the Non Core businesses of the Banks would be buried elsewhere, for the Irish banks this would be Nama, for the UK it is probably not easy to establish the return that the UK treasury have been getting, as the reporting would not be highlighted in this level of detail (Treasury won't report to the market as such in the same way the Core banks would).

    But it is quite amazing how Nama keep telling everyone that they are making money, and the Core banks were making money until Covid 19 caused a blip, and these vulture funds are making money or they wouldn't be buying up 'distressed debt'. But the poor old taxpayers always seem to be handed the mucky end of the stick, and need to be happy with 50p in the pound. Usually accompanied by a note that says 'there is no alternative'


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    #116
    Timing belt
    Registered Users Posts: 3,408 ✭✭✭Timing belt


    Arthur Daley wrote: »
    It's probably also best to understand that when these banks today report numbers for say 2018 or 2019, these are 'core' numbers. They reflect the go ahead business without the bad loans offloaded to Nama or UK equivalent. So when we assume that the bank is making no return we presumably base this off what we see reported in the financial press (the core or good business). From what I can see their issue is with this business specifically.

    Information about the Non Core businesses of the Banks would be buried elsewhere, for the Irish banks this would be Nama, for the UK it is probably not easy to establish the return that the UK treasury have been getting, as the reporting would not be highlighted in this level of detail (Treasury won't report to the market as such in the same way the Core banks would).

    But it is quite amazing how Nama keep telling everyone that they are making money, and the Core banks were making money until Covid 19 caused a blip, and these vulture funds are making money or they wouldn't be buying up 'distressed debt'. But the poor old taxpayers always seem to be handed the mucky end of the stick, and need to be happy with 50p in the pound. Usually accompanied by a note that says 'there is no alternative'

    The non core and distressed debt has been sold. If it wasn’t sold the banks would have failed stress tests and would have needed another bailout or go bust that was the alternative to selling on these assets to funds.


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    #117
    Arthur Daley
    Registered Users Posts: 4,451 ✭✭✭Arthur Daley


    Timing belt wrote: »
    The non core and distressed debt has been sold. If it wasn’t sold the banks would have failed stress tests and would have needed another bailout or go bust that was the alternative to selling on these assets to funds.

    So if the Non Core and distressed debt has been sold, and the Go ahead Bank makes a loss in the year of Covid, and little return outside of that, but then as we know it's a low interest rate environment, then isn't closing down the Bank a bit of a rash decision.

    I mean in the same markets Bank of Ireland reported profits of three quarters of a billion in 2019 and almost a billion in 2018

    https://www.rte.ie/news/business/2020/0224/1117207-bank-of-ireland-results/


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    #118
    Timing belt
    Registered Users Posts: 3,408 ✭✭✭Timing belt


    Arthur Daley wrote: »
    But the Banks aren't cash strapped, they are awash with liquidity.

    Liquidity and capital are to different things.

    Prior to the financial crisis banks used this liquidity for capital investments and when the crash came it didn’t have enough liquidity to run the bank. This is why the ECB brought in stricter rules to stop this happening again.


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    #119
    Arthur Daley
    Registered Users Posts: 4,451 ✭✭✭Arthur Daley


    Timing belt wrote: »
    Liquidity and capital are to different things.

    Prior to the financial crisis banks used this liquidity for capital investments and when the crash came it didn’t have enough liquidity to run the bank. This is why the ECB brought in stricter rules to stop this happening again.

    Yeah I know, but when we refer to the business as cash strapped it usually is referring to liquidity issues.

    The Banks were solvent because the losses were temporarily passed over to the taxpayers, who now fund the debt at close to zero interest rate.


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    #120
    Claw Hammer
    Registered Users Posts: 6,163 ✭✭✭Claw Hammer


    Arthur Daley wrote: »
    But does this not destroy the Capital they put in to date. So it is far from freeing up capital, it is decimating (well halving it).

    Considering the growth in the Irish economy every year, there seems little business rationale to be offering people money at 50p in the pound.

    What is gone in to date is gone. When in a hole, stop digging?


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    #121
    Daz_
    Registered Users Posts: 930 ✭✭✭Daz_


    Hi , if have a mortgage with U bank on the tracker rate will that be gone if they are sold or new owner obliged to keep the tracker ?


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