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NatWest (NWG) Plans to Shut Ulster Bank Operations in Ireland

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After recording an annual net loss of £753 million ($1.05 billion) in 2020 due to more than £3 billion in provisions created to tackle the uncertain financial impacts of the pandemic, NatWest Group plc (NWG - Free Report) has decided to shut down its Ulster Bank operations in Ireland. Shares of the company gained 1.4% following the announcement.

The bank said on Friday that after conducting a strategic review of its Republic of Ireland business, it has come to the conclusion that it will “not be in a position to achieve an acceptable level of sustainable returns over our planning horizon. As a result, we are to begin a phased withdrawal from the Republic of Ireland over the coming years.”

NatWest added, “We intend to do this in a responsible way, with careful consideration of the impact on our customers, colleagues and other stakeholders and in a manner that is closely aligned with our purpose and balances the interests of all our stakeholders.”

NatWest’s decision to pull out of the Irish markets marks a very drastic change in Ireland’s banking landscape since the 2008 financial crisis.

Ulster Bank will continue to operate in Northern Ireland. Moreover, the bank mentioned, “Nothing changes today for staff or customers. There will be no compulsory departures or branch closures in the Republic of Ireland this year as a result of this announcement.”

However, Irish union officials said that nearly 3,000 jobs could be affected by the decision.

NatWest’s CEO, Alison Marie Rose, stated, “In recent years, our strategy for Ulster Bank in the Republic of Ireland has been to improve returns by growing the business, reducing costs and resolving legacy issues. I want to pay tribute to our colleagues who through their commitment and dedication have helped to transform this business.”

Notably, the bank has mentioned that it signed a non-binding memorandum of understanding with Allied Irish Banks to sell €4 billion worth of its Irish commercial loan business.

Also, according to people familiar with the matter, NatWest might be in talks with state-owned Permanent TSB Group Holdings to sell some of Ulster’s loans.

Over the past six months, shares of NatWest have gained 70.5% compared with 35.8% growth recorded by the industry it belongs to.

Currently, the company carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Now, let’s check the performance of some of the other foreign banks in fourth-quarter 2020.

Barclays (BCS - Free Report) reported net income attributable to ordinary equity holders of £220 million ($290.5 million), down 67.7% from the prior-year quarter.

While HSBC Holdings (HSBC - Free Report) reported pre-tax profit of $1.4 billion against a pre-tax loss of $3.9 billion recorded in the prior-year quarter, ICICI Bank’s (IBN - Free Report) net income of INR49.40 billion ($676 million) was up 19% year over year.

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