The chief executive of Ulster Bank has defended the decision of the bank and its parent NatWest not to give advance warning of its plan to withdraw from the Irish market to staff.
In a written opening statement provided to the Oireachtas Committee on Finance, Public Expenditure and Reform, and Taoiseach, Jane Howard said that until the NatWest board made a decision on Friday morning, there was no certainty as to the final outcome of the review.
She accepted that this situation, coupled with the ongoing media speculation and some of the communications issued to workers, added to the stress of the situation.
Ms Howard also explained how speculation that appeared in the media in September about the bank’s future left it in the difficult situation of not being able to update staff because the review was underway, but the outcome was uncertain.
She told TDs and Senators that there was a requirement to conduct discussions in a manner that ensured commercial sensitivity and confidentiality, while in the latter stages of the review management were subject to additional restrictions until the board made a decision that could be publicly announced to the market.
The bank boss said the lender’s decision to decline to meet with the committee during the review was because the matters were, and in some cases still remain, commercially sensitive.
She also said there was a clear rationale for NatWest’s decision to wind down the bank, adding that over the last ten years, its strategy has been to improve returns by growing the business, reducing costs and resolving legacy issues.
But despite the progress made, it has become clear the bank is unable to generate sustainable returns over the long-term for shareholders, she stated.
The committee was also told that negotiations with AIB and Permanent TSB, along with other counterparties, on the potential sale of loans, may take many months to progress.
Ms Howard reiterated that there will be no immediate changes for staff and no new compulsory departures this year and that it does not intend to close any branches this year.
Customers will also be unaffected in the short term, she said, with the bank set to continue to offer a full banking service for the foreseeable future, most likely until 2022 at the earliest.
The CEO also told committee members that in communicating with customers through a process that began last week, the Consumer Protection Code has been placed at the heart of the activity.
Aontú leader Peadar Tóibín said the treatment of Ulster Bank employees was “absolutely outrageous” as they had been “left in the dark” up to the last minute.
Ms Howard has said that the manner in which the exit of the bank from the Irish market was communicated was “not the way anyone would have wanted” and that she has personally apologised for this.
Fine Gael’s Neale Richmond told the committee that he has heard from many concerned constituents, including an 85-year-old lady in Dundrum who was wondering if her ATM Card would still work and people wondering what would happen to their mortgage or business account.
He asked Ulster Bank management how they are engaging with customers who are worried about their accounts and mortgages.
Labour Finance Spokesperson Ged Nash also criticised Ulster Bank management for the manner in which employees were treated.
He said that it was an insult to them and that they deserved better.
Mr Nash said that he does not think employees should accept that as of last Thursday Ulster Bank did not know whether it would remain operating in Ireland or not.
He said nobody could be asked to accept that a major bank of this scale would make a decision of this magnitude overnight.
Ms Howard said that their decision to exit the Irish market was due to the bank being unable generate long-term returns to an “acceptable level”.
She that this has been a challenge for the bank over recent years.
Ms Howard said other factors such as negative interest rates, competing with new entrants to the market and maintaining facilities such as a mobile app also contributed to the decision.
Mr Nash added that he believes Ulster Bank was paying “lip-service” to attempts to change the culture of banking in Ireland.
He asked Ms Howard if she thinks she should resign from the Irish Banking culture board.
Sinn Féin’s spokesperson on finance Pearse Doherty said that the treatment of workers was not acceptable and should not have happened.
Ms Howard reiterated commitments to ensure that there would be no compulsory exits this year, that there would be no branch closures this year and that the memorandum of understanding with AIB would seek to ensure that staff would travel with any loans that AIB acquires.
He asked the bank’s senior management if they are engaging with any “vulture funds” regarding the procurement of elements of the Ulster Bank loan book.
Deputy Doherty asked that they give an assurance that this will not happen.
Jane Howard, CEO of Ulster Bank, said that when the bank sells mortgages and other loans, customers will be protected under the consumer protection code.
He said that Ulster Bank’s decision is terrible for “staff, for customers, for regions that are dependent on your branches, but it’s also a terrible position for banking in this state. It’s a great decision for investors in Natwest”.
Deputy Doherty said the selling-off of the Ulster Bank loan book would see dividends increase for shareholders.
However, he warned that this would come at the expense of the Irish banking system and the people “who fattened up this bank for over 160 years”.
Mr Doherty said that if loans were to transfer to Bank of Ireland and AIB, it would have implications for competition and could leave both Bank of Ireland and AIB with over 90% of SME loans in the country.
Ms Howard reiterated commitments to ensure that there would be no compulsory exits this year, that there would be no branch closures this year and that the memorandum of understanding with AIB would seek to ensure that staff would travel with any loans that AIB acquires.
She said that Ulster Bank was still in the early stages of discussion with Permanent TSB and others.
Ms Howards said that there are now regular engagement sessions with colleagues
She said that it was a core objective of the bank to minimise job losses, hence the memorandum of understanding with AIB.
FSU says behaviour of Ulster Bank management was “deplorable”
Earlier, the union representing staff at Ulster Bank described the behaviour of management at the lender and its parent NatWest in the six months leading up to last Friday’s announcement last Friday as “deplorable”.
In a written opening statement provided to committee, Financial Services Union (FSU) general secretary John O’Connell said staff and customers had been subject to abysmal treatment by the bank.
He said the union had met with Ulster Bank CEO Jane Howard on five occasions since September, when news of the review by NatWest of Ulster Bank’s operations emerged.
He said that on every occasion the bank refused to provide terms of reference of the review, who was conducting the review, or any update on its progress with staff and customers getting their information through the media instead.
Given the bank has signed a non-binding memorandum of understanding with AIB to sell it commercial loans, Mr O’Connell questioned whether anyone believes it credible for Ulster Bank to have adopted a position that no decision on the review was taken until last Thursday evening.
He also criticised NatWest for deciding last September not to engage with staff and their representatives and to not operate to good change management practices and agree a communication channel.
He claimed the group instead chose to add to the mental stress and anxiety of their staff, despite claims it cares passionately about their employee’s wellbeing.
Mr O’Connell also criticised the Central Bank, saying the outcome of the review was an indictment because of its failure to act.
“For months, there has been media reports on the failure of the bank to engage with key groups and for months consumers and staff looked to the regulator to take action,” he said.
“But the Central Bank can act now and give communities an assurance that no branch closures will be acceptable during the pandemic.”
The union boss also accused the two banks of putting pursuit of profit above all else.
“There is no doubt that NatWest and Ulster Bank management have failed their staff and customers,” he told the committee.
“Their deplorable behaviour over the last six months needs to be addressed at the highest level in Government and by the Central Bank. In its comments on Friday the regulator failed to highlight even once the poor treatment of staff. Not good enough.”
He said priorities need to be agreed around the withdrawal, including that jobs must follow the work to other institutions, that compulsory redundancies are not acceptable under any circumstances and that there should be no consideration of branch closures until the end of 2022 at the earliest.
“Agreeing these three issues would give certainty to staff and customers,” he said. He also reiterated the FSU’s call for a banking forum to be set up to examine the future of banking here.
Mr O’Connell told the committee that Ulster Bank said in a statement that there would be no compulsory redundancies.
However, he said 40 staff are fighting for their jobs and trying to stop NatWest and Ulster Bank from making them redundant.
He also said it was far from clear what the impact on colleagues in Northern Ireland would be with concerns over the future of 600 jobs in Ulster Bank’s Belfast office.
Mr O’Connell said the union’s belief is that proposals to sell Ulster Bank loans to PTSB and AIB that are currently being developed would be the best possible outcome as they would enable as many jobs and branches in Ireland to be maintained.
He said week after week during the review, staff were asked questions and they were giving information to give to customers that they did not even believe themselves.
He said staff were impacted by this.
He said there are regulatory authorities who are responsible for governing health and safety, and they should receive a copy of the committee’s deliberations he added.
Additional reporting Tommy Meskill