DUBLIN, March 14 State-controlled Royal Bank of
Scotland has commissioned investment bank Morgan Stanley
to advise it on potential merger opportunities for its
Irish unit, Ulster Bank, the business's chief executive was
quoted as saying on Friday.
Ulster Bank, which is the biggest bank in Northern Ireland
and the third largest in the Republic of Ireland, has racked up
losses of 2.5 billion pounds ($4.2 billion) over the past two
It accounts for less than 4 percent of RBS's assets but was
responsible for 20 percent of its bad debt charges last year.
"We think there may be further consolidation in the market.
We're looking to see if Ulster Bank can play a part in that,"
Jim Brown said in an interview in the Irish Times newspaper.
"There are a number of smaller institutions, without getting
into the specifics, and there may be opportunities with those in
terms of fulfilling our strategic ambitions, but I couldn't
mention specifically who they might be."
RBS's own chief executive Ross McEwan said last month that
he wanted to develop Ulster as a challenger to Ireland's biggest
Earlier this month The Sunday Times newspaper said a team
inside RBS was looking at tie-ups between Ulster and other Irish
lenders, such as permanent tsb or the Irish units of
Danske Bank or KBC.
At the same time Ireland's finance minister Michael Noonan
said he would like a "significant" new bank with a big balance
sheet to enter its lending market this year to drive competition
in the diminished sector.
Noonan said he was looking at the possibility of overseas
banks partnering with Irish lenders to create a competitor to
the country's biggest lenders - Allied Irish Bank and
Bank of Ireland.
"If you look at the banking market, it's very clear that
there's the two pillar banks and there's us. What we're looking
to do is to become a more compelling choice in the market,"
Brown told the Irish Times.
"The government is aware that we are looking at other
options. The government has been very clear. They are looking
for a third banking force in the market ... There's a lot of
work to be done to see if its viable or not."