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Natwest considering closing Ulster Bank in the ROI

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    #332
    Q&A
    Registered Users Posts: 556 ✭✭✭Q&A


    Yes up to 10% of the outstanding balance each year. For many I presume they wouldn't come close to the 10% overpayment each year so they effectively have a variable rate mortgage on a (low) fixed rate.

    Even if you wanted to overpay by more than 10% Ulster Bank cap their break fee at 6 months interest. That assumes there's a break fee at all. All that versus paying 1% extra to be variable. Not to say fixing is right every time but UB definitely present a lot of favourable options. A shame it appears we'll be seeing them go.


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    #333
    Paul_Mc1988
    Registered Users Posts: 748 ✭✭✭Paul_Mc1988


    Q&A wrote: »
    Yes up to 10% of the outstanding balance each year. For many I presume they wouldn't come close to the 10% overpayment each year so they effectively have a variable rate mortgage on a (low) fixed rate.

    Even if you wanted to overpay by more than 10% Ulster Bank cap their break fee at 6 months interest. That assumes there's a break fee at all. All that versus paying 1% extra to be variable. Not to say fixing is right every time but UB definitely present a lot of favourable options. A shame it appears we'll be seeing them go.

    Yeah this is accurate. My mortgage at the start of the year was 315k. So I can overpay by 31.5k this year with no penalties. Its the main reason I went with UB.


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    #334
    silver2020
    Registered Users Posts: 2,045 ✭✭✭silver2020


    Squeaksoutloud wrote: »
    I reviewed the mortgage last year and ended up changing out Term by paying more per month. I also reviewed the fixed vs variable and decided not to change as:

    1. was considering doing a lump sum payment. Those funds are going elsewhere now.
    2. Wanted to see how we got on with the higher monthly figure and was half thinking of pushing it higher again so wanted full flexibility.

    Now that the two items above are dealt with I think you are right - variably currently 3.2% and it is a no brainer to fix now @ 2.2% for 2 years or 2.35% for 4/5 years.

    UB still allow additional payments on fixed rates?

    or does their 5year high value (over €250k) rate apply to you - 2.2%


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    #335
    Sheep Shagger
    Moderators, Business & Finance Moderators Posts: 6,271 Mod ✭✭✭✭Sheep Shagger


    Loan book looks like it will be carved out and sold as expected

    https://www.irishexaminer.com/business/companies/arid-40222754.html


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    #336
    jj880
    Registered Users Posts: 4,481 ✭✭✭jj880


    JTMan wrote: »
    You are betting on this Friday so.

    The results are announced to the stock market at around 6/7 AM on Friday 19 February so Friday evening on 19 February will be too late.


    No announcement today it seems.


    You reckon definitely before next Friday?


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    #337
    Darc19
    Registered Users Posts: 3,817 ✭✭✭Darc19


    It will either come the day before results or in the results themselves.

    It will be an Irish story. It's such a minor part of NatWest that it will barely register with shareholders.

    They probably do more business in Liverpool than Republic of Ireland


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    #338
    JTMan
    Registered Users Posts: 5,540 ✭✭✭JTMan


    Darc19 wrote: »
    It will either come the day before results or in the results themselves.

    It will be an Irish story. It's such a minor part of NatWest that it will barely register with shareholders.

    They probably do more business in Liverpool than Republic of Ireland

    Natwest are a listed PLC that will have to manage the release of the information carefully. That probably means this information will be released outside stock exchange trading hours. Hence, staff might be called to a meeting on Thursday evening and told or it will be announced to the stock exchange at 6/7 AM on Friday and staff will thereafter be called to a meeting on Friday morning.


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    #339
    Darc19
    Registered Users Posts: 3,817 ✭✭✭Darc19


    JTMan wrote: »
    Natwest are a listed PLC that will have to manage the release of the information carefully. That probably means this information will be released outside stock exchange trading hours. Hence, staff might be called to a meeting on Thursday evening and told or it will be announced to the stock exchange at 6/7 AM on Friday and staff will thereafter be called to a meeting on Friday morning.

    Yes if it hadn't been flagged already that it was under review.

    So as it's not an unknown event, they can announce at any time and staff consideration probably is more important.

    If no announcement before Friday, then Friday will see either an update or a firm decision.


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    #340
    jimmycrackcorm
    Registered Users Posts: 14,331 ✭✭✭✭jimmycrackcorm


    Squeaksoutloud wrote:
    Now that the two items above are dealt with I think you are right - variably currently 3.2% and it is a no brainer to fix now @ 2.2% for 2 years or 2.35% for 4/5 years.

    UB still allow additional payments on fixed rates?

    It's a no brainer to fix now and use the flexibility to overpay when you wish.
    I'm starting my monthly overpayments now before any announcements are made.


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    #341
    Saudades
    Registered Users Posts: 378 ✭✭Saudades


    RTE's Will Goodbody put out an article this weekend but it doesn't cover anything that hasn't already been discussed in this forum.

    https://www.rte.ie/news/business/2021/0212/1196838-big-withdrawal-decision-on-ulster-banks-future-nears/


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    #342
    py
    Registered Users Posts: 1,542 ✭✭✭py


    I've a few queries in relation to all of this, which I'd assume will affect others here. Not expecting concrete answers but perhaps people know what has happened with other loan books being sold off in the past.

    1. For those with a mortgage account who have been provided with the loyalty discount due to having current account with UB, do people think this will be gone if the loan book is sold?

    2. If the mortgage loan book is sold off, what are the chances of getting out of a fixed rate mortgage without penalties?


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    #343
    Q&A
    Registered Users Posts: 556 ✭✭✭Q&A


    py wrote: »

    2. If the mortgage loan book is sold off, what are the chances of getting out of a fixed rate mortgage without penalties?

    I was thinking this myself. If a non-bank buys the mortgage how should/could a break fee be calculated. More broadly would the mortgage directive (which break fees are based on) actually apply to a fund.

    At least if another bank purchases the loan book there would be less unknowns


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    #344
    Jim2007
    Moderators, Business & Finance Moderators Posts: 10,100 Mod ✭✭✭✭Jim2007


    Q&A wrote: »
    I was thinking this myself. If a non-bank buys the mortgage how should/could a break fee be calculated. More broadly would the mortgage directive (which break fees are based on) actually apply to a fund.

    At least if another bank purchases the loan book there would be less unknowns

    Keep in mind, that we're not talking about selling of a block of bad loans, so it is unlikely that it will be discounted to the level that would interest a so called vulture fund. I expect it will be take by someone with an interest in running it as an ongoing operation.

    If I was in Natwest right now, I'd be looking at the possibility of securitising at least the mortgage book and sell it to my private clients as some kind of MBS. Generally speaking Irish people are reliable debtors and the in the current market the returns would no be all that bad. The only negative would be that it is a bit on the small side... on the other hand it might offer the best return for the bank as you get to collect additional fees.

    But we will have to wait and see what happens.


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    #345
    Q&A
    Registered Users Posts: 556 ✭✭✭Q&A


    Jim2007 wrote: »
    Keep in mind, that we're not talking about selling of a block of bad loans, so it is unlikely that it will be discounted to the level that would interest a so called vulture fund. I expect it will be take by someone with an interest in running it as an ongoing operation.

    In the current environment I'd say a lot of funds would be looking enviously at a performing book earning north of 2%.

    My point was more if a non-bank was to purchase it what might that mean for break free calculations.Do they fall outside the scope of the mortgage directive? If not it'll be interesting to see how different the underlying performance of a fund Vs a bank like UB might impact the calculation.


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    #346
    Darc19
    Registered Users Posts: 3,817 ✭✭✭Darc19


    There's a set formula for break fees. It's written in your contract.

    They can't disregard the contract and neither can you.

    Break fee will not change


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    #347
    py
    Registered Users Posts: 1,542 ✭✭✭py


    Darc19 wrote: »
    There's a set formula for break fees. It's written in your contract.

    They can't disregard the contract and neither can you.

    Break fee will not change

    Thanks for clearing that up, just wasn't sure how it worked.


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    #348
    the_amazing_raisin
    Registered Users Posts: 11,054 ✭✭✭✭the_amazing_raisin


    Just catching up with this thread, we've just signed up for a 4 year fixed rate with UB, kind of regretting it now given the news

    I guess realistically if NatWest decided to sell UB then it'll take years to sell off the different parts of the bank and they'll have a lot of pushback from staff unions and politicians at every stage

    My guess is that they'll try to shut down the retail side of the bank and sell the deposit accounts off to another bank, since that's the worst performing section given the current negative interest rates

    NatWest might want to keep the loan book since that's an easy money maker, but they might be forced to sell it as part of the overall bank

    My main concern as a mortgage holder is around what happens if the loan book is sold. I keep hearing that the buyer needs to respect the terms and conditions of the current mortgage, but how far does that go. For example, can they change how overpayments are managed or the variable rate interest at the end of a fixed rate?

    My other worry would be if NatWest or an external fund cuts the staff managing the loan book down to a handful of people. Getting anything out of them when they're understaffed and disinterested will be difficult and they might drag their heels on every request

    "The internet never fails to misremember" - Sebastian Ruiz, aka Frost



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    #349
    Sheep Shagger
    Moderators, Business & Finance Moderators Posts: 6,271 Mod ✭✭✭✭Sheep Shagger


    cruisey1987 wrote: »
    Just catching up with this thread, we've just signed up for a 4 year fixed rate with UB, kind of regretting it now given the news

    I guess realistically if NatWest decided to sell UB then it'll take years to sell off the different parts of the bank and they'll have a lot of pushback from staff unions and politicians at every stage

    My guess is that they'll try to shut down the retail side of the bank and sell the deposit accounts off to another bank, since that's the worst performing section given the current negative interest rates

    NatWest might want to keep the loan book since that's an easy money maker, but they might be forced to sell it as part of the overall bank

    My main concern as a mortgage holder is around what happens if the loan book is sold. I keep hearing that the buyer needs to respect the terms and conditions of the current mortgage, but how far does that go. For example, can they change how overpayments are managed or the variable rate interest at the end of a fixed rate?

    My other worry would be if NatWest or an external fund cuts the staff managing the loan book down to a handful of people. Getting anything out of them when they're understaffed and disinterested will be difficult and they might drag their heels on every request

    If they want to exit the market which is sounds like they do they'll sell all the bits, they won't hold on to the loan book.

    You have a contract and that can't change without agreement on both sides. Treatment of overpayments and roll off rates will change but theres no point worrying if you are on a fixed rate. You should be shopping around when that comes up anyway.

    As for customer service well that could change, who knows it could even change for the better.

    Finally, politicians and unions mean nothing if they want to leave the market...it will happen.


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    #350
    Q&A
    Registered Users Posts: 556 ✭✭✭Q&A


    Darc19 wrote: »
    There's a set formula for break fees. It's written in your contract.

    They can't disregard the contract and neither can you.

    Break fee will not change

    No one's talking about disregarding a contract.

    The fee is a function of the rates faced by the bank. Now imagine that bank sells your mortgage. The rates faced by the purchaser may be different.

    Break fee change daily with market rates

    Not an issue for mortgages issued in the last couple of years but for anyone who fixed before 2016 time was open to a wide interpretation by banks. The mortgage directive changed this and restricted the liberties banks could take within their contractual formulas

    https://www.independent.ie/business/personal-finance/property-mortgages/banks-under-fire-for-charging-huge-fees-for-breaking-out-of-fixed-rates-37240089.html


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    #351
    Timing belt
    Registered Users Posts: 3,427 ✭✭✭Timing belt


    cruisey1987 wrote: »
    Just catching up with this thread, we've just signed up for a 4 year fixed rate with UB, kind of regretting it now given the news

    I guess realistically if NatWest decided to sell UB then it'll take years to sell off the different parts of the bank and they'll have a lot of pushback from staff unions and politicians at every stage

    Politics has no impact it’s a commercial decision and unions are weak and powerless .. if they decide to sell it will be completed within a year or sooner.

    My guess is that they'll try to shut down the retail side of the bank and sell the deposit accounts off to another bank, since that's the worst performing section given the current negative interest rates

    NatWest might want to keep the loan book since that's an easy money maker, but they might be forced to sell it as part of the overall bank

    If they get a ok price for it they will sell...if not they may transfer loan book to another division of the bank and let it run down but that would not release capital which Natwest want to get their hands on to invest in the Natwest online offering. Can only see the loan book being transferred to another part of Natwest if it fitted strategically with other plans such as accessing the Irish financial services/funds industry in a post brexit world.


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    #352
    Darc19
    Registered Users Posts: 3,817 ✭✭✭Darc19


    Q&A wrote: »
    No one's talking about disregarding a contract.

    The fee is a function of the rates faced by the bank. Now imagine that bank sells your mortgage. The rates faced by the purchaser may be different.

    Break fee change daily with market rates

    Not an issue for mortgages issued in the last couple of years but for anyone who fixed before 2016 time was open to a wide interpretation by banks. The mortgage directive changed this and restricted the liberties banks could take within their contractual formulas

    https://www.independent.ie/business/personal-finance/property-mortgages/banks-under-fire-for-charging-huge-fees-for-breaking-out-of-fixed-rates-37240089.html

    That article is almost 3 years old. Highly unlikely anyone is now on a 5% fixed rate esp Ulster as they were active in bringing rates down.

    And exactly as you are saying, there is a set formula. It's written in the contract and it must be adhered to by both parties


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    #353
    the_amazing_raisin
    Registered Users Posts: 11,054 ✭✭✭✭the_amazing_raisin


    Timing belt wrote: »
    Politics has no impact it’s a commercial decision and unions are weak and powerless .. if they decide to sell it will be completed within a year or sooner.




    If they get a ok price for it they will sell...if not they may transfer loan book to another division of the bank and let it run down but that would not release capital which Natwest want to get their hands on to invest in the Natwest online offering. Can only see the loan book being transferred to another part of Natwest if it fitted strategically with other plans such as accessing the Irish financial services/funds industry in a post brexit world.

    I guess the politics element is that the government owns PTSB and given the bad press the previous governments have had over mortgages being sold they may force PTSB to merge with UB

    Wait and see though, the government won't want to intervene in the banking sector again so they'll say no unless there's no other option

    I'm not sure the bank will be sold as one big entity, by all accounts prospective buyers won't be interested in the deposit accounts and I can't imagine any banks want to take on 88 branches across the nation given they're trying to shut down branches themselves

    There'll be the usual haggling as buyers want the profitable bits and try to avoid the underperforming parts

    "The internet never fails to misremember" - Sebastian Ruiz, aka Frost



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    #354
    Timing belt
    Registered Users Posts: 3,427 ✭✭✭Timing belt


    cruisey1987 wrote: »
    I guess the politics element is that the government owns PTSB and given the bad press the previous governments have had over mortgages being sold they may force PTSB to merge with UB

    Wait and see though, the government won't want to intervene in the banking sector again so they'll say no unless there's no other option

    I'm not sure the bank will be sold as one big entity, by all accounts prospective buyers won't be interested in the deposit accounts and I can't imagine any banks want to take on 88 branches across the nation given they're trying to shut down branches themselves

    There'll be the usual haggling as buyers want the profitable bits and try to avoid the underperforming parts

    PTSB will take over sme...branch network and deposit book not worth anything and other banks are waiting for ulster announcement to introduce further deposit caps/negative interest..the only part of the business that you could realistically sell in the current market is the loan book.

    There will be no merger with PTSB as they don’t have the capital without government pumping in 10bn or doing a share offering to raise funds.


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    #355
    Jim2007
    Moderators, Business & Finance Moderators Posts: 10,100 Mod ✭✭✭✭Jim2007


    cruisey1987 wrote: »
    I guess the politics element is that the government owns PTSB and given the bad press the previous governments have had over mortgages being sold they may force PTSB to merge with UB

    No. They have no authority to do so, it would require EU approval and that will no be forthcoming. The entire banking across the Euro Group is suffering the same fate, consolidating and rationalize needs to happen and there would be several objections to such a request.


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    #356
    Geuze
    Registered Users Posts: 13,190 ✭✭✭✭Geuze


    Talk is that Lonestar are interested in the mortgages, and PTSB are interested in the commercial loans.


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    #357
    Geuze
    Registered Users Posts: 13,190 ✭✭✭✭Geuze


    cruisey1987 wrote: »
    I guess the politics element is that the government owns PTSB and given the bad press the previous governments have had over mortgages being sold they may force PTSB to merge with UB

    No, the media reports have made it clear that as UB is a foreign bank, then the Irish Govt have less power / influence.


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    #358
    garrettod
    Registered Users Posts: 2,430 ✭✭✭garrettod


    Timing belt wrote: »
    Politics has no impact it’s a commercial decision and unions are weak and powerless .. if they decide to sell it will be completed within a year or sooner... .

    That's absolute rubbish!

    Try 5 to 7 years, if it's too be broken up and sold to different buyers. If they are lucky, they may get an initial portfolio or two sold in year 1, and even that's a stretch, given the impact of coronavirus on all large office based industries.

    Preparing loan books for sale, meeting the requirements of the central bank on how to treat customers fairly etc...

    Take a look at previous banks that were would down, none of them were done in a year.....

    Thanks,

    G.



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    #359
    Timing belt
    Registered Users Posts: 3,427 ✭✭✭Timing belt


    garrettod wrote: »
    That's absolute rubbish!

    Try 5 to 7 years, if it's too be broken up and sold to different buyers.

    Take a look at previous banks that were would down, none of them were done in a year.....

    What is there to break up and sell? The loan books are the only thing worth anything. The rest is just wind down which could be done in a year. It’s not a big bank or overly complicated.


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    #360
    Geuze
    Registered Users Posts: 13,190 ✭✭✭✭Geuze


    garrettod wrote: »
    T
    Take a look at previous banks that were would down, none of them were done in a year.....

    I don't recall Danske taking 7 years.

    They scaled back at first, yes, by closing retail current accounts, as far as I recall.

    And also sold the mortgage book.

    I don't have any dates to hand, but it did not take 7 years.


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    #361
    Jim2007
    Moderators, Business & Finance Moderators Posts: 10,100 Mod ✭✭✭✭Jim2007


    garrettod wrote: »
    Try 5 to 7 years, if it's too be broken up and sold to different buyers.

    From experience, it will take about 10 years to fully settle all of the banks affairs, but most of the business will be gone within 6 months. And there is not much the central bank can do since it will no longer be a licensed bank. The biggest stick the Central Bank has is to withdraw a license, but if you don’t want the license....

    So long as the bank terminates it’s relationship with its customers in accordance the T&C they both signed up to there is no recourse.


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