First Trust losses make attracting a buyer even harder
First Trust’s chances of finding a buyer have been dealt a major blow after the Irish-owned bank reported substantial losses for the first half of the year.
The beleaguered bank, which has more than 40 branches across Northern IrelaSnd, made a £52m loss between January and June — £11m more than the same period last year. Its parent, Dublin-based AIB, reported record losses of €2bn.
A £24m pre-tax operating profit at First Trust was wiped out after it had to set aside £76m to cover bad debts. However, unlike AIB, First Trust made no transfers to the Republic’s National Asset Management Agency (NAMA).
First Trust, which was put up for sale on March 30, has so far failed to attract a buyer. Economist John Simpson said: “First Trust has a lot of work to do to makes itself more attractive to a buyer. Yesterday’s results will have forced the market price of the business down.”
Customers can also expect to pay for the bank’s heavy losses in the form of higher charges, warned Mr Simpson.
“First Trust will have to rebuild its profitability at the same time as attracting deposits. That means it will be much more likely to have to increase the cost of borrowing on loans and mortgages and banking charges,” he explained.
AIB managing director Colm Doherty yesterday warned that home owners would face further pain as the bank, 18.6% of which is owned by the Irish taxpayer, would hike mortgage interest rates.
“I think, reluctantly, we're going to have to follow all of the other banks in raising mortgage rates,” he said.
Tomorrow, Ulster Bank is also expected to report losses in its half year results. Bank of Ireland’s results are due out on Wednesday.