* NatWest to exit Ireland, sell 4 bln euros of loans to AIB
* Bank makes 351 mln stg loss on bad loan charges
* Bank resumes dividend payouts, targets 800 mln stg per
year
(Adds chairman, CEO comments)
By Iain Withers and Lawrence White
LONDON, Feb 19 (Reuters) - NatWest said it would
wind down its Irish arm Ulster Bank, as Chief Executive Alison
Rose continues to slash away at underperforming parts of the
state-owned lender after it swung to a loss in 2020.
The bank will exit Ireland following a strategic review,
plans to sell 4 billion euros ($4.8 billion) worth of loans to
Allied Irish Banks, and discuss selling some assets to mortgage
lender Permanent TSB, NatWest said on Friday.
NatWest reported a pre-tax loss of 351 million pounds for
the year, better than an average of analyst forecasts of a 418
million pound loss as bad loans came in below expectations.
The move to sell Ulster Bank is the latest by NatWest CEO
Alison Rose to strip out costs and simplify the lender since
taking the helm in late 2019, after cutting back trading unit
NatWest Markets and axing digital venture Bó just months after
its launch.
Ulster Bank has served customers in Ireland for more than
160 years and is the country's third largest lender with a 20
billion euro loan book and 2,800 staff.
The decision follows a months-long review and sparked
immediate criticism in Ireland, where the government and
regulators have expressed concerns over shrinking banking
competition.
Irish Finance Minister Paschal Donohoe said on Friday the
banking landscape would be poorer as a result of NatWest's
decision.
"I won't say the Irish government welcomes this decision,
they do not. But it is supportive of the plans to dispose parts
of the business to AIB and the discussions we're having with
Permanent TSB," NatWest chairman Howard Davies told reporters.
Rose said the exit - which does not cover NatWest's Northern
Irish unit - would take a number of years and would be done "in
a very considered way".
NatWest shares were up 1% at 9.48 GMT, after initially
rising as much as 2.5% in early trading.
"Alison Rose is making a name for herself as a no-nonsense
leader, keeping the core business healthy by adding to its core
business and chopping off the gangrenous limbs," said Freetrade
senior analyst Dan Lane.
"That ruthless streak will serve her well in a year that's
likely to be even harder than the last."
PROFIT SQUEEZE
Despite posting a loss, NatWest announced it would pay a
dividend of 3 pence per share, after the Bank of England gave
lenders the green light to resume investor payouts.
The bank remains 62% taxpayer-owned as a legacy of its state
bailout in the 2007-09 financial crisis, meaning the government
will receive 225 million pounds of the overall 364 million pound
pot.
It pledged to increase shareholder returns in future years
by distributing at least 800 million pounds per year from next
year up until 2023.
British banks' profits have all been squeezed by near-zero
central bank interest rates and a spike in expected loan
defaults due to the pandemic.
But unlike rival Barclays, which reported robust
profits on Thursday, NatWest could not count on a surge in
revenues at its own much smaller investment bank NatWest Markets
to prop up its earnings.
Overall, NatWest's impairment charges for expected bad loans
came in at 3.2 billion pounds for 2020, below the bank's
guidance of a minimum 3.5 billion pounds.
The lender has granted around 14 billion pounds of
state-backed loans to struggling companies so far in the
pandemic.
It maintained one of the strongest capital ratios among its
peers, up to 18.3%.
The bank said by 2023 it would aim to reduce its capital
buffer to 13-14%, hit a return on tangible equity of 9-10% and
reduce costs by 4% a year.
Rose's pay was 1.8 million pounds, after she voluntarily
gave up a quarter of her fixed pay for 2020.
($1 = 0.7156 pounds)
($1 = 0.8271 euros)
(Reporting by Iain Withers and Lawrence White;
Editing by Rachel Armstrong and Emelia Sithole-Matarise)
Barclays (BARC)
Natwest (NWG)
