# RBS to merge Ulster Bank with PTSB?



## Knuttell (2 Mar 2014)

Royal Bank of Scotland is considering merging its
troubled Ulster Bank business with Irish rivals,
according to a report.
The taxpayer-backed lender is mulling a tie-up of
Ulster with other lenders to strip out costs at the
loss-making division and help boost its position in
the Irish market, according to The Sunday Times.
It is thought that potential merger candidates
could be Permanent TSB or the Irish subsidiaries
of Danske Banke or KBC.


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## Knuttell (2 Mar 2014)

www.irishexaminer.com/breakingnews/business/rbs-considers-ulster-bank-merger-623994.html


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## MrEarl (2 Mar 2014)

Knuttell said:


> ....It is thought that potential merger candidates
> could be Permanent TSB or the Irish subsidiaries of Danske Banke or KBC.



Merging the businesses probably makes good commercial sense .. but why leave it so late, with Danske already half way out the door ?

I'd be somewhat shocked if the likes of Danske, BoS or ACC didn't previously explore such an option as merging banks ... not to mention throw the old PostBank in to the mix or the Permo.


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## Knuttell (2 Mar 2014)

Danske and KBC are highly unlikely to merge with UB.Really hope the EU allow PTSB continue on as is,have only moved all accounts to them and don't want any part of UB or their 3rd world software problems that routinely  stop customers withdrawing their money plus only recently took out a mortgage with permo.


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## Lightning (2 Mar 2014)

Agreed that the chances are slim to none that Danske will merge with Ulster Bank. It is far too late for a u-turn by Danske. 

KBC, possible but does their parent really have the stomach for acquisitions here?

A PTSB / Ulster Bank tie up seems plausible. A tie up like this would not be good for competition as it would become even more limited. 



Knuttell said:


> Really hope the EU allow PTSB continue on as is,.



The EC will not allow the status quo for PTSB. The government have been negotiating a survival plan for PTSB for years. This is still ongoing with a deadline looming. 

A home needs to be found for the bad bank. Most likely fresh capital needs to be found for the good bank possibly via new investors in a new merged bank. 

One thing is for certain, decisions need to be made about PTSB's future soon.


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## hubble (3 Jun 2014)

I was listening to the KBC Ireland Country Manager on the radio over the weekend. I think that he was talking to Richard Curran. He certainly was not denying a takeover or taking an interest in UBIL. 

I wonder what the fate of UBIL will be?


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## Lightning (3 Jun 2014)

Yeah, the message from KBC seems to be increasingly warming to a merger. 

At the same time, some reports say that UB are not likely to pursue a merger. Also, PTSB have publically said they are focused on being a stand alone entity. 

It seems more likely that UB will pursue a private equity investment, initially at least. RBS seem keen to walk away from UB.


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## hubble (3 Jun 2014)

It is likely UBIL are carrying massive unrecognised losses on their balance sheet. My understanding is that if they are deemed a subsidiary on RBS balance sheet then the ultimate write downs will not show up on RBS balance sheet (thus continuing the "recovery" path with a view to the ultimate re- privatisation  of a RBS more focussed on UK).
 Likely RBS will agree in the shorter term to a sweet deal to get rid of the UBIL problem.


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## theresa1 (30 Jun 2014)

http://www.independent.ie/business/...permanent-tsb-merger-in-balance-30391523.html

Cost of setting up base may prove too expensive


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## Lightning (30 Jun 2014)

theresa1 said:


> http://www.independent.ie/business/...permanent-tsb-merger-in-balance-30391523.html
> 
> Cost of setting up base may prove too expensive



If a merger cannot occur, with KBC nor PTSB, then one has to ask what RBS will do instead. 

Private equity seems to be the initial priority but will private equity be interested if a merger is off the cards? Will RBS find another way to exit Ulster Bank RoI?


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## murphaph (30 Jun 2014)

Danske style complete closure would remain the only viable option I suppose?


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## hubble (30 Jun 2014)

I am reading "Shredded - RBS the Bank that broke Britain.  The hubris of the main movers in RBS right up to recently (and presently?) is difficult to comprehend.  I would say that the RBS takeover of Nat West (UB parent) in 2000 was the beginning of the end for UB.  RBS (and therefore UB) were anxious to grow market share at any cost.

My guess is that the problems at UBIL are huge.  Is there really a business case for UBIL and PTSB to merge?  If there is surely UBIL should rapidly clean up the Balance Sheet, rapidly close branches and make a core profitable bank which could be regrown or sold off in a trade sale or flotation.

A €1B investment in IT is not unreasonable for a third banking force but is there really a profitable case for a third banking force?

If it were not for the Political (in GB because it will show up increased losses and in Ireland in maintaining competition) dimension I think that RBS would have already taken the BOSI route. Maybe they will ultimately take the High Road.


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## Lightning (30 Jun 2014)

murphaph said:


> Danske style complete closure would remain the only viable option I suppose?



RBS have a few options. 
(1) Merge with KBC - Off the cards as confirmed by KBC. 
(2) Merge with PTSB - Seems really unlikely. Too complex. Too costly. Putting two broken balance sheets together would be very difficult. IT costs could easily spiral. 
(3) Another bank acquires UB RoI - Seems highly unlikely. No bank seems to be sniffing around. 
(4) Private equity / venture capitalists acquire a stake in UB RoI. There seems to be a lot of private equity interest. The question is will they still be interested now that a merger is off the cards. 
(5) Close UB RoI. As the previous poster said, politics is stopping this from happening. 
(6) Float UB RoI as a segregated entity. Surely, this can only happen well into the future when balance sheet repair may have occurred.  
(7) Do nothing. Seems unlikely. MS are involved. RBS are under pressure from the UK government to do something. 

My best guess is a mix of private equity with another restructure including more branch closures as an initial move.


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## murphaph (1 Jul 2014)

hubble said:


> A €1B investment in IT is not unreasonable for a third banking force but is there really a profitable case for a third banking force?


I'd say no. We are entering a period of great change for European banking. SEPA is the first step. It is the stated intention of the Commission that citizens from anywhere in the Union should be able to use financial services anywhere else in the Union, without a requirement to reside where those services originate. 

I am just one person but I have successfully completed the move to a non-Irish bank for all day to day banking. It was a bit of hassle for sure but I now receive rent from a local authority to a German account, my Irish mortgage is drawn from that account, Revenue pay my tax refunds <ahem> to that account and so on. It is indicative of the future of banking I think. An investment of a billion € for a market that will be opened up within x years (by force of law, like SEPA) is a very risky investment unless the goal is to expand well beyond Ireland. 

Europe simply has far too many banks for the open market situation which is coming in the next 10 - 20 years.


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