Ulster Bank's operation in Ireland has been formally split into separate businesses, north and south of the Border, by its UK parent company Royal Bank of Scotland.
The move officially happened on Thursday as part of a wider reorganisation of RBS announced last year by its group chief executive, Ross McEwan.
It means Ulster Bank in Northern Ireland will now report into RBS's UK divisions, instead of the Dublin headquarters established in the wake of its acquisition of First Active building society in 2004.
The Northern Ireland operation has about 1,800 staff and assets of about $4 billion and is led now by Richard Donnan.
In the Republic, Ulster Bank comprises some 3,200 employees and assets of €25 billion. This business is led by interim chief executive Paul Stanley. It will continue to operate its own board of directors, chaired by former Eircom boss Phil Nolan.
New bank
Jim Brown
previously ran the Ulster Bank business on both sides of the Border but moved to the UK in recent months to head Williams & Glyn, a new bank set to be spun off by RBS.
RBS committed itself to the Ulster Bank business in the Republic last year, having carried out a strategic review that looked at various options, including a sale and possible mergers. Mr McEwan wants it to become a "challenger bank" here to AIB and Bank of Ireland.
However, some commentators believe the separation of Ulster Bank is the first step in a longer-term plan to either sell the business in the Republic or merge it with another entity to form a larger company.
Ironically, Ulster Bank in the Republic will still have to pay banking levies both in Ireland and the UK in spite of its separation from the Northern Ireland unit. This is the result of the British levy being payable on group assets, regardless of their location.
Bank levy extension
The Irish bank levy, which generates €150 million annually for the State, was extended out to 2021 last Tuesday by Minister for Finance
Michael Noonan
. It was originally to have expired in 2016.
Ulster Bank’s share of this is about €18 million, while the UK levy amounts to about €16 million.
In addition, it is understood that Ulster Bank in the Republic pays about €16 million in various other regulatory fees and charges.
In the context of its decision to continue to retain ownership of Ulster Bank in the Republic, the extension of the Irish bank levy is unlikely to sit well with the RBS group board.
Especially as Ulster Bank received a £15 billion bailout from its UK parent post the 2008 financial crash.
Having once held the ambition of becoming the largest retail bank in Ireland, Ulster Bank has spent the past seven years downsizing in an effort to put the business on a sustainable footing focused on core consumer and business lending across a slimmed-down branch network. Its headcount on the island has reduced from about 7,300 at its peak in 2008.
