THE TAOISEACH HAS said that NatWest Group’s decision to wind down Ulster Bank operations in the state is “not good news for Ireland”.

The decision to exit the Republic of Ireland market came after a strategic review by the bank’s parent company NatWest, which was announced last September. Ulster Bank has over one million customers, along with 2,800 staff and 88 branches across the country. 

Some 600 jobs in Belfast are also affected by the retreat although the bank’s Northern Ireland operations are otherwise unimpacted.

Speaking to TheJournal.ie this afternoon, Micheál Martin said the Government’s priority is on protecting the workers affected by the decision.

First of all, it is not good news for Ireland in terms of a bank that has been here for so long is now leaving. We’ll have to reflect on that in terms of policy frameworks and so on. I think our ultimate object and priority will be to protect the workers, in so far as we possibly can, the thousands of workers involved.

“But also we are conscious of competition… We’re very conscious of competition into the future within the Irish banking system,” the Taoiseach said.

Concerns have been raised that Ulster Bank’s exit from the mortgage market could drive up the cost of lending in Ireland, which is already higher than the eurozone average. Even less competition within that market, which is dominated by AIB and Bank of Ireland, could drive interest rates up further, experts have warned.

Yesterday, Tánaiste Leo Varadkar said the Government supports the idea of a “third force” in Irish banking, which could compete with the pillar banks on mortgage rates.

That could mean 75% state-owned Permanent TSB, which also has a relatively small share of the mortgage market, buying all or part of Ulster Bank’s mortgage loan book. There is a concern that without such intervention, home loans could be purchased en masse by vulture funds.

The Taoiseach said, “The Government’s position in terms of how we would like this to happen I think is clear. Minister Donohoe has made that clear in terms of wanting banks that provide a full range of banking services to be involved in the purchase of the books.”

But he added that Ulster Bank is a “private company” and the Irish Government doesn’t have any “authority over its decision-making processes”.

“We’re interested in protecting the customer, protecting the workers, in so far as we possibly can, and also creating a competitive framework for the future of banking in this country,” Martin said.

“But we have a bit of a journey to travel yet.”

The Taoiseach’s comments echo remarks made by Finance Minister Paschal Donohoe this afternoon. 

Speaking to reporters, Donohoe said that there were “many bridges to cross” before a legitimate third Irish banking force could be established, although it remains a Government objective.

“But it is possible across the coming period that developments could take place that could play a role in that journey,” he said.

The minister added that consumer protection laws that have been put in place over the last decade mean there are “robust, proportionate levels of protection” for customers affected by Ulster Bank’s exit.

— Reporting by Christina Finn