Royal Bank of Scotland is to retain full ownership of Ulster Bank following a strategic review of its operations in Ireland.
The move ends more than two years of uncertainty about the bank’s future and will come as a relief to its 5,600 Irish staff.
RBS had considered selling a stake in Ulster Bank to a US private equity group or merging it with a rival, possibly Permanent TSB, in the Republic.
However, today the Edinburgh-based group ended speculation, announcing Ulster Bank would continue to remain a core part of its operations.
“We have a good market position and believe that, with investment, Ulster Bank can deliver attractive shareholder returns in the future,” said RBS chief executive Ross McEwan.
The completion of the review was published alongside Ulster Bank’s third quarter results, which showed the bank made an operating profit of £394 million (€485 million) for the three months to September, compared with a loss of £139 million for the same quarter last year.
It is the first time the bank has reported a profit for three quarters in a row since the financial crisis.
"RBS has confirmed Ulster Bank's core status and a good strategic fit with RBS' retail and commercial banking strategy," Ulster Bank chief executive Jim Brown said.
He said the bank would continue its dual strategy of building a challenger bank in the Republic and strengthening its market position in Northern Ireland.
The bank, which received £15.3 billion of bailouts during the financial crisis, said its net interest margin had risen to 2.32 per cent during the quarter, while expenses had fallen.
RBS has transferred non-performing assets to its internal bad bank, RBS Capital Resolution, which wrote down losses of €392 million relating to Irish loans
Commenting on the results, Mr Brown said: “This performance was driven by the underlying strength of the core Ulster Bank franchise and impairment recoveries, which are indicative of our proactive debt management and rising asset prices in a recovering economy.”
On the IT problems that severely disrupted business in 2012, Ulster Bank said it expects to begin settlement discussions with the Central Bank before the end of the year.
RBS, meanwhile, said it was setting aside £400 million to settle foreign exchange rate rigging allegations.
The announcement comes a day after rival Barclays said it was making a £500 million provision as it finalises talks with global regulators over the scandal.
RBS, which is 80 per cent owned by the British taxpayer after being rescued during the financial crisis, said it was putting aside a further £100 million to cover compensation payouts for customers mis-sold payment protection insurance (PPI). It takes the lender’s total bill for PPI to £3.3 billion.
RBS said profits for the third quarter were up to £1.27 billion, compared with a loss of £634 million in the same period last year.
