(Alliance News) - NatWest Group PLC on Friday confirmed it has sold off a chunk of Ulster Bank assets to Permanent TSB Group Holdings PLC, as part of its phased withdrawal from Ireland.
In mid-February, in its annual results, NatWest outlined plans to exit from the Republic of Ireland, which has already included selling EUR4.2 billion in gross performing commercial lending and associated undrawn exposures of about EUR2.8 billion to AIB Group PLC.
On Friday, NatWest signed a non-binding memorandum of understanding with Permanent TSB to offload about EUR7.6 billion of assets. The package of assets is made up of performing non-tracker mortgages, a performing micro-SME loan book, Ulster Bank's Lombard asset finance business and 25 of its branch locations.
At March 31, Ulster Bank had total retail, micro-SME and asset finance gross lending of EUR16.1 billion.
As part of the deal, NatWest will receive a minority non-consolidating equity stake in PTSB. The Irish financial services firm noted NatWest could end up with a 20% stake, and will also pay the Edinburgh-headquartered lender an undisclosed additional cash consideration.
Chief Executive 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 deal is expected to be accretive to Permanent TSB's return on tangible equity and will help it maintain a long-term pro forma CET1 Ratio above 14%.
Permanent TSB Chief Executive Eamonn Crowley said: "This potential transaction complements our growth strategy and will accelerate the delivery of Permanent TSB's ambition of becoming Ireland's best personal and small business bank.
"We see this as a once in a generation opportunity to fast-track the growth of an Irish bank with a strong community and customer service ethos that has evolved over its 200-year history. It also supports the investments we are making in the transformation of our in-branch and digital banking services."
Natwest shares were up 0.6% to 195.30 pence in London on Friday morning.
By Paul McGowan; paulmcgowan@alliancenews.com
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Natwest (NWG)