The chief executive of Ulster Bank’s owner, Royal Bank of Scotland, has said that the group may look at “safe” Irish acquisitions again in the coming years, after it offloads a UK business under the direction of the European Union.
Ross McEwan, head of RBS for the past three years, told analysts on Friday while the group has got “lots to do to clean up” Ulster Bank, he would be “open to” carrying out an acquisition in Ireland at some point. He was speaking after RBS published results for the first nine months of the year, which showed a decline in Ulster Bank Republic of Ireland’s operating profit.
RBS is restricted from making acquisitions until it sell its 300-branch Williams & Glyn unit as a condition set by the EU under its £45 billion (€50 billion) bailout during the financial crisis. Mr McEwan said on Friday that RBS will miss its 2017 deadline to offload the business, which, it emerged this week, has received a takeover approach from Clydesdale Bank, run by former AIB chief executive David Duffy.
“We can’t do major acquisitions while we’ve got commitments through our Williams & Glyn,” Mr McEwan. “We’ve said that the Irish business is attractive. We’re getting it back into shape. At some point, it needs to start growing again it safely – can I just say it again, safely – not like we did last time.”
RBS bought Ulster in 2000 as part of its acquisition of National Westminster Bank, before going on four years later to buy First Active. Ulster’s assets more than doubled to £70 billion in the four years before boom turned to bust in 2008, which resulted in RBS having to inject £15.3 billion into the Irish business to keep it afloat.
The UK government owns 73 per cent of RBS as a result of the group’s own taxpayer rescue.
RBS has subsequently shrunk the size of Ulster Bank’s balance sheet through the sale of billions of euros of assets, with the Irish business returning to profit in 2014 as it began to release some of the provisions it had previously set aside for bad loan losses.
However, the pace at which it has been freeing up reserves has slowed down, contributing to a decline in Ulster Bank’s operating profit for the third quarter months of the year, to £68 million, from £108 million for the year-earlier period.