NatWest would take PTSB stake in €7.6bn Irish deal

Alison Rose

NatWest Group plc — formerly known as RBS — said on Friday it is making progress with its phased withdrawal from the Republic of Ireland as it signed a potential deal to offload €7.6 billion of Ulster Bank’s Irish assets to Ireland’s Permanent TSB Group Holdings Plc (PTSB).

As part of the potential deal, which sent PTSB shares up 15%, NatWest would take a stake of up to 20% in the enlarged share capital of Permanent TSB Group and receive “an additional cash consideration.”

That means the UK government, which currently owns 54.7% of NatWest, would become an indirect shareholder in Permanent TSB, which is 75% owned by the Irish state.

PTSB said it signed a Memorandum of Understanding (MOU) to work with NatWest on the potential acquisition by Permanent TSB of €7.6 billion of assets including the performing non-tracker mortgage book of Ulster Bank, the performing micro-SME/Business Direct loan book of Ulster Bank, the Lombard Asset Finance loan business of Ulster Bank and 25 branch locations in Ulster Bank’s network.

“As part of the consideration for the perimeter transferring to Permanent TSB, NatWest will become a shareholder with up to 20% of the enlarged share capital of PTSB Holdings, together with PTSB Holdings paying NatWest an additional cash consideration,” said PTSB.

NatWest Group CEO Alison Rose said: “In line with our strategy of a phased withdrawal from the Republic of Ireland, I am pleased that we are today announcing a significant update in the form of this non-binding memorandum of understanding with Permanent TSB. 

“This builds on the recently announced sale of the majority of Ulster Bank’s performing commercial banking business to Allied Irish Bank.  

“Our focus remains on supporting our customers and colleagues as we continue our withdrawal from the Republic of Ireland.”

PTSB Holdings CEO Eamonn Crowley said: “This potential transaction complements our growth strategy and will accelerate the delivery of Permanent TSB’s ambition of becoming Ireland’s best personal and small business bank.

“We see this as a once in a generation opportunity to fast-track the growth of an Irish bank with a strong community and customer service ethos that has evolved over its 200-year history.

“It also supports the investments we are making in the transformation of our in-branch and digital banking services …

“We are conscious that there is still significant work to be done to agree legally binding agreements later this year, but we are optimistic that we can work with all parties to create an enlarged Permanent TSB with an increased national footprint that will provide enhanced products and services to our present and future customers.

“We welcome all Ulster Bank customers to Permanent TSB, whether or not their loan is transferring as part of this potential transaction, and we look forward to supporting them with their banking needs.”

NatWest said: “As part of the phased withdrawal from the Republic of Ireland announced on 19 February 2021, NatWest Group plc and Ulster Bank in the Republic of Ireland (UBIDAC) have today entered into a non-binding Memorandum of Understanding (MOU) with Permanent TSB (PTSB) for the proposed sale of a perimeter comprising performing non-tracker mortgages, performing micro-SME loans, UBIDAC’s asset finance business and a subset of its branch locations.

“The proposed perimeter included approximately €7.6bn of gross performing loans as at 31 March 2021, the majority relating to non-tracker mortgages, and 25 branch locations.

“UBIDAC had total retail, micro-SME and asset finance gross lending of €16.1bn at 31 March 2021.

“The TUPE principle will apply to colleagues wholly or mainly assigned to the agreed in-scope perimeter and we expect the number of colleagues that will transfer as part of the transaction to be in the range of 400-500.

“There is no immediate change for UBIDAC customers and colleagues at this time.

“As part of the consideration for the proposed transaction, it is proposed that NatWest Group would receive a minority non-consolidating equity stake in PTSB.

“The potential sale contemplated by the MoU remains subject to due diligence, further negotiation and agreement of final terms and definitive documentation, as well as obtaining regulatory and other approvals and satisfying other conditions.

“The proposed sale may not be concluded on the terms contemplated in the MoU, or at all.”