National Westminster Bank (NatWest) has reached a non-binding Memorandum of Understanding (MOU) with Permanent TSB (PTSB) to divest certain assets of its subsidiary Ulster Bank (UBIDAC).
The agreement is part of the UK-based retail and commercial bank’s strategy of phased withdrawal from the Republic of Ireland.
The proposed sale includes performing non-tracker mortgages, micro-SME loans, UBIDAC’s asset finance business and a subset of its branch locations.
NatWest Group CEO Alison Rose said: “In line with our strategy of a phased withdrawal from the Republic of Ireland, I am pleased that we are today announcing a significant update in the form of this non-binding memorandum of understanding with Permanent TSB.
“This builds on the recently announced sale of the majority of Ulster Bank’s performing commercial banking business to Allied Irish Bank. Our focus remains on supporting our customers and colleagues as we continue our withdrawal from the Republic of Ireland.”
The proposed sale comprises gross performing loans worth around €7.6bn as of 31 March 2021, of which €7bn related to non-tracker mortgages.
It also includes retail, micro-SME and asset finance gross lending valued around €16.1bn as of 31 March 2021, along with 25 branch locations.
The transaction will be executed by applying TUPE principle for the transfer workforce as part of the divestiture, and is expected to affect 400-500 employees.
In addition to receiving a cash consideration, NatWest is expected to receive up to 20% stake in the enlarged share capital of PTSB, as part of the consideration.
The proposed sale as per the terms of the MoU is subject to due diligence, further negotiation and agreement of final terms and definitive documentation.
Also, the transaction is subject to receiving regulatory and other required approvals along with satisfying other conditions.
Reuters quoted PTSB chief executive Eamonn Crowley saying: “I think the deal is very good for existing shareholders because in effect they will get the benefit of an enlarged bank without having to put in any more capital and NatWest obviously see the value in it (taking a stake) as well.”
