Ulster Bank is on track to return its banking licence in the Republic in the coming months after 165 years in the market, following the transfer of unclaimed customer deposits to a trust, according to sources.
The bank, a unit of NatWest Group, may hand back the licence to the Central Bank of Ireland as early as next month, though the timing could drift into the third quarter, the sources said.
The company aims to operate under a retail credit licence as it continues its winddown.
Chief executive Jane Howard, who has led Ulster Bank since 2018, is set to become chief executive of NatWest’s RBS International division at the start of July, the group has confirmed. Ms Howard joined the wider group 45 years ago straight from school.
The central bank last year authorised a new subsidiary of Ulster Bank, called Ulydien Trust Company, to act as a service company over a trust set up to hold unclaimed funds of former customers’ closed accounts and products, according to its latest annual report.
Migration of these funds to the trust ensures that unclaimed customer balances are safeguarded and available to beneficial owners should they seek to reclaim them in the future, the report said. Unclaimed funds of less than €100 in individual accounts were given to charity, though the owners retain a right to reclaim their money.
Last September, Ulster Bank transferred the last of €1 billion of the €5 billion of tracker loans it had agreed to sell to AIB. It also completed the sale of its last home loans book, a portfolio of €400 million of so-called offset mortgages, during the same month to ICS Mortgages’s parent, Dilosk.
Ulster Bank’s assets, which stood at €31 billion when NatWest decided in early 2021 to wind down the unit, fell by 75 per cent over last year to €516 million. Most of the remaining assets comprised money due from holding companies and fellow subsidiaries of NatWest.
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Ulster Bank has paid €1.59 billion of dividends to its UK parent over the past two years as it sought to free up much of its remaining surplus capital. It had a little over €300 million of equity on its balance sheet at the end of December, after it also racked up €707 million of net losses over the past two years as part of the wind-down.
The lender had received an effective £15 billion (€17.6 billion) bailout from British taxpayers during the financial crisis. The rescue bill equated to a third of the total UK government’s £45 billion 2008 bailout of NatWest, when the group was known as Royal Bank of Scotland.
Ulster Bank paid €3.5 billion of dividends to its parent between 2016 and 2019.
Adding the dividends paid over the past nine years and the remaining equity suggests NatWest will end up recovering only about 30 per cent of Ulster Bank’s rescue bill.
Ulster Bank had a 2,800-strong workforce when NatWest decided to wind down the business. Its staff numbers, including temporary employees, had fallen to 100 by the end of last year. Temporary workers averaged 21 last year.
The €66 million net loss Ulster Bank recorded last year would likely have been significantly higher had the Court of Appeal not found last September in favour of the lender in two cases where borrowers claimed they were entitled to tracker mortgages.
Lawyers had previously told the High Court in 2022 that the two cases could have an impact on “thousands” of customers and trigger “enormous financial” consequences for the lender.
Ulster Bank previously set aside about €300 million to cover costs relating to the industry-wide tracker scandal.
