Ulster confident despite heavy loss
Bad debts weighed heavily on Ulster Bank’s books last year, with the bank yesterday posting a full year loss of £368m for 2009.
The huge loss compared to a profit of £218m in 2008 and was largely the result of the bank setting aside £649m in impairment charges for loans it does not expect to be paid back.
The figures came as parent company Royal Bank of Scotland, which is 84% owned by the taxpayer, reported a loss of £3.6bn for the year, but risked public outrage by saying it will still pay about £1.6bn in bonuses to its staff.
RBS’s loss compared with a record £24.3bn deficit the year before — the largest in UK corporate history — and shares rose about 7% as the outcome was better than analysts had expected.
UK Financial Investments (UKFI), the body set up to manage the Government’s stakes in banks, has given its blessing to the bonus payments, understood to be around £1.3bn for the investment banking division and about £300m elsewhere.
Chief executive Stephen Hester said there was a need to balance external pressures over remuneration with the bank’s need to retain key workers.
Ulster Bank said its results were in line with expectations but had deteriorated as economic conditions worsened.
“Our full year results for 2009 are set against the backdrop of extremely difficult market conditions. While the global economy is seeing signs of recovery, challenges facing the Irish economy |remain,” said chief executive Cormac McCarthy.
“We took early and decisive action in 2009 to adapt our business to the changing landscape. We have made significant progress on our strategic plan with the completion of the merger of First Active with Ulster Bank. Our Voluntary Severance Programme, which will see over 1,000 people leave the organisation, is also near completion.”
The bank said the mortgage market had stabilised in the second half of 2009 and Mr McCarthy gave an upbeat outlook for 2010.
“Our challenge now is to return the bank to profitability and I am confident that with the progress we have made to date, we are well placed to face the challenges ahead,” he said.