Until the recent crisis, the Ulster Bank has had a long (176 years) and successful history. In a previous post, I talked about the losses incurred by the Ulster Bank as a result of lending to property developers and house buyers. In an FT interview over the weekend, Philip Hampton, the chairman of RBS, stated that the RBS board was extremely concerned about the Ulster Bank's loan impairment of £12 billion. This is the issue which has "most troubled" the RBS board, which says a lot! The bank pioneered the 100% mortgage in Ireland and lent heavily to Irish property developers. With one out of ten Irish mortgages in arrears of at least three months, the Ulster Bank now faces huge losses on its residential mortgages.
What should the RBS board do about its Ulster Bank problem? As it is unlikely that RBS will be able to sell the bank, they may decide to go down the route of the Northern Bank, and rebrand the bank. However, with the revival of Henri Hippo, it seems that the bank are keen to get their customers to remember the 'good old days' when the bank attracted deposits from Irish families and lent them out in a prudent fashion to Irish farmers and businesses.