Ulster Bank sale expected

ByAndrew Bushe

DUBLIN — A spinoff from a British banking takeover bid is set to cause a huge shake-up in Ireland with the sale of the Ulster Bank, which was set up in Belfast in 1836.

Ulster, which operates through 233 offices in Ireland, is to be disposed of by NatWest Bank as part of defensive measures following a hostile bid by the Bank of Scotland.

NatWest, which has owned the bank for 82 years, will either sell it off or float it as a separate company on the London Stock Exchange.

Financial analysts believe the most likely option is a sale in what would be one of the biggest corporate deals ever in Ireland.

Foreign banks anxious to gain a toehold in the Irish market are expected to be interested as would existing banks keen to extend their operations by buying either the whole of the bank or part of its operations north or south of the border.

Ulster Bank made profits of £155 million last year and the change of ownership will have a major impact on the financial services sector.

Bank of Scotland operations have already shaken up the banks and building societies following its offering of cut-price mortgages by telephone from Edinburgh.

The biggest rationalization of the banks occurred in the 1960s when the number of banks shrank from eight to four and AIB was formed to compete with Bank of Ireland.

The arrival of foreign banks and cut price telephone and Internet-based operations is leading to a major intensification of competition for financial services in a situation where the consumer is ending up the ultimate winner.