Ulster Bank is in advanced talks with An Post about the State company providing lodgement and withdrawal facilities for the bank's customers.

This would mirror a similar deal signed recently by Ulster Bank with the post office in Northern Ireland and would be used as a means of mitigating the effects of future branch closures in the Republic.

An Post has had a similar arrangement with AIB for more than a decade and has also provided such services for Danske Bank, which is winding down its retail operations here.

A potential deal between the two parties emerged yesterday after the release of annual results by Ulster Bank and its UK parent company Royal Bank of Scotland, along with the outcome of a five-month group- wide strategic review.

Dragged into the red
Ulster Bank's operating loss rose by 40 per cent last year to £1.5 billion (€1.82 billion) due to higher impairment losses. It made a profit before impairment losses of £317 million, £7 million lower than the previous year but a 30 per cent rise in impairment costs to £1.77 billion dragged it into the red.

Total income increased to £871 million from £845 million in 2012 while its net interest margin improved during the fourth quarter to 2.1 per cent.

In terms of the strategic review, RBS said it wanted to be a "challenger bank" in the Republic to AIB and Bank of Ireland.

RBS said it was still “reviewing” the business here to make it “viable and sustainable into the future” but it stopped short of detailing what this would involve in terms of branches closures and staff cuts.

Traditional branches
Speaking to The Irish Times yesterday, Ulster Bank chief executive Jim Brown said the number of "traditional [bank] branches would reduce" and would be "more advisory and consultation with some transaction capability".

This would reflect the fact that just 16 per cent of transactions take place in branches.

Mr Brown declined to say how many branches would close or how many job cuts would be involved from its operations here being pared back.

In a note to staff yesterday, Mr Brown said the bank would be “looking at increasing other points of presence” here and cited its agreement in Northern Ireland last week to extend its services to customers through the post office network.

In Northern Ireland, Ulster Bank is to become more closely integrated with RBS’s operations in Britain.