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Ulster Bank's sale of property loans is risk to businesses

By Jamie Stinson

Published 18/06/2015

RBS chief executive Ross McEwan
RBS chief executive Ross McEwan

Business in Northern Ireland have been put at risk by Ulster Bank's sale of loans on property assets to private equity funds, a property adviser has claimed.

Conor Devine, principal at GDP Partnership, which advises firms who have had their loans sold, claimed the bank had "hidden the loan sales process".

However, in a statement to the Belfast Telegraph, Ulster Bank denied this and said it has communicated with its customers about the sale of loans.

Ulster Bank parent Royal Bank of Scotland has been selling bad-performing loans on property in order to clean up its balance sheet after its £45m bail-out in 2008. Loans have been bought by so-called vulture funds such as Cerberus, and institutional investors such as Goldman Sachs and Davidson Kempner.

The most recent sale was announced by RBS at the end of May for loans which included borrowings on the Sirocco Works. The package was sold to Cerberus for £205m. Mr Devine said he obtained the figure of 1,500 loans from a source and claimed the public was not aware of the extent of the loan sales.

"I think we've all known for some time that Ulster Bank has sold a number of its loans - however, to find out that it is in excess of 1,500 is staggering. This equates to billions of pounds."

He added: "I believe we now need to hear from Ulster Bank on this issue. I also believe that politicians should be asking pertinent and direct questions of the bank."

Mr Devine claimed the funds "would not act in the interest of the customer".

"They are here to get a return on their money for their investors as quickly as possible, typically three to five years."

Responding to Mr Devine's claims, Ulster Bank said: "RBS announced in November 2013 the creation of RBS capital resolution (RCR).

"RCR was set up to remove the riskiest and most capital intensive assets from the RBS balance sheet by the end of 2016.

"The RCR portfolio includes assets from Ulster Bank (RCRI). Its activity in Northern Ireland is materially complete.

"We follow an established communication process with our customers, clearly outlining RCRI's principles and possible outcomes as well as communicating any changes with them."

In an exclusive interview with Business Telegraph this week, RBS chief executive Ross McEwan told the Belfast Telegraph the loans were "better off" sold.

"Some of those assets are better off in somebody else's hands that can nurture and create value over a longer term than we can," Mr McEwan said.

"Some of those loans will be developed and more money poured into them than we would have been able to do so in a shorter period of time.

"If we hadn't made those moves we would still have loans that were in complete strife and we would have been focusing backwards instead of forwards."

Belfast Telegraph

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