Ulster Bank agrees to sell its mortgages to Permanent TSB

Last February Ulster Bank, which has around 1.1 million customers, 2,800 staff and 88 branches here, sent shockwaves around the country when it announced that it was to exit the Republic after over 160 years.

While Ulster Bank’s exit will take place on a phased basis it is now starting to gather pace.

Back in July Ulster Bank and Permanent TSB announced that they had both entered into a non-binding agreement which would see PTSB acquire €7.6 billion of Ulster Bank's loans (mainly personal mortgages and small business loans) and 25 of its branches.

Today they have announced that the agreement is now legally binding and will come into force subject to final approval by Competition and Consumer Protection Commission.

As part of the sale, NatWest will also take a 16.66% stake in PTSB as part payment for the loans.

And in good news for taxpayers, PTSB, which is currently 75% owned by the Government, has said it doesn’t envisage having to tap the Government for extra money to complete the transaction. However the share deal with NatWest will ultimately dilute the State’s stake in PTSB to 62.5%.

How does today’s news affect Ulster Bank mortgage customers?

Under today’s agreement, Ulster Bank has formally agreed to sell its performing mortgages to Permanent TSB. In other words, mortgages where there aren't any serious repayment issues.

If you’re an Ulster Bank mortgage customer the most important thing to know is that your monthly repayment, interest rate and terms and conditions will all remain the same and there is little for you to do or worry about for now. 

When your mortgage gets moved over to PTSB, Ulster Bank will communicate this with you. This is expected to happen towards the end of next year according to both banks. By law Ulster Bank must give you at least two months' notice before your mortgage is moved, but it is likely to give you more. 

However this deal doesn't include tracker mortgages. Ulster Bank is still seeking a buyer for these loans and AIB has been mooted as a potential suitor. 

Tracker mortgages aren't making much amount for money for banks right now so it’s not a huge surprise that PTSB hasn't shown an interest in buying them.  

Nevertheless, as with the above, no matter who ends up buying your tracker, you will still be able to keep it and if you're lucky enough to have one, you won't find any better value elsewhere! 

Non-performing mortgages, in other words loans that are heavily in arrears, aren't included in this deal either and a buyer is still being sought for these.

There is the small possibility that Ulster Bank might continue to keep its tracker and non-performing mortgages after it has closed up shop in Ireland but contract out the day-to-day servicing of the loans (statements, customer service, payment services, balance queries etc) to a specialist provider. This is what happened when the old Irish Nationwide (then Danske Bank) closed its retail operations in Ireland in 2013 and chose Pepper to manage the bulk of its loans (though it also outright sold some of its loans to Pepper too). 

I’m in mortgage arrears? What’s happening with my loan? 

As mentioned, today's agreement between Ulster Bank and PTSB doesn’t include non-performing loans. 

There is a possibility that these loans might be sold to a so-called 'vulture fund'.

These funds have a bad reputation in Ireland partly due to the tabloid media and politicians hyping things up and not understanding what they actually do. 

A vulture fund is simply a company that primarily invests in debt considered to be very weak or in default. Your consumer rights as a mortgage holder with a vulture fund are no different to what they are with any other Irish bank or lender and you will have the same protections as everyone else under the Central Bank's Consumer Protection Code. 

In fact, research has shown that customers who are in financial distress have a far better chance of having some of their debt written off with a vulture fund as opposed to a bank. So don't get overly worried if you see talk of loans being sold to one of these funds.

As long as you engage with your lender and agree on a repayment plan, you should have little to worry about.

I have a mortgage approval in principle - what should I do?

Ulster Bank has said it will allow customers who have an approval in principle to draw down their mortgage. But this will obviously then transfer over to PTSB in due course. 

Should I switch my mortgage?

As mentioned, your current repayment terms and conditions won't change.

However this might be a good time to consider switching lender and getting better value, particularly if you’re on a fixed rate and are coming to the end of your agreement as PTSB’s rates aren’t nearly as competitive as Ulster Bank’s.

For example Ulster Bank offered its existing customers fixed rates as low as 2.20%. But the best rate at present for an existing PTSB customer is 2.95%.

PTSB does offer new customers rates lower than 2.95%, but existing customers can't avail of them.   

Rates as low as 1.95% are now available from Avant Money and ICS Mortgages and rates as low as 2.10% are on offer from AIB. Meanwhile, 20 and even 30-year fixed rates are now available from Finance Ireland and Avant Money for those seeking longer-term peace of mind with their repayments.

Check out our guide for info on how to switch mortgage and use our mortgage calculator to find the best rates on the market and see how much you could save by switching.

If you do decide to switch your mortgage, you can submit an online enquiry through our new mortgage broker service and one of our experienced financial advisors will call you back to get your application started.

You’ll be happy to hear that our mortgage broker service is entirely free and is fully digital from start to finish, meaning everything can be carried out online from the comfort of your home. And it's completely paper-free too! 

You can learn more about our mortgage broker service here and to learn about how your mortgage application will be assessed, take a look at this guide.

However there is still time for you to lock into another fixed rate with Ulster Bank (which PTSB would then have to honour) so chat to Ulster Bank about your options. 

Ulster Bank branch sale

As part of the deal, 25 of Ulster Bank's 88 branches will also be sold to PTSB and kept open.

All remaining Ulster Bank branches will close, however, starting on a phased basis from mid 2022 onwards.

Here’s a list of the branches being sold. 

What about current accounts?

Current accounts, and indeed savings accounts and credit cards, aren’t included in today’s deal, however PTSB has said it’s open to accepting new business.

See here for more information on what Ulster Bank’s closure means for all customers. 

If you’re an Ulster Bank current account customer and are looking to switch, you can use our current account comparison service to quickly and easily compare the different account features and charges from all of Ireland’s main providers. 

Take a look at our guide on how to switch current accounts for further information on switching or check out our video on YouTube on who is offering the best value current accounts in 2021.

Recent banking turmoil

There have been numerous big changes to the banking sector in recent months. 

• KBC shockingly announced that it was considering exiting the Irish market earlier this year, following in Ulster Bank’s footsteps.
• Back in March, Bank of Ireland announced that it would be closing over 100 branches by the end of September 2021.
• Earlier this month, it was revealed that AIB is also planning to close 15 branches nationwide by the end of the year.

You can stay up to date with all the latest banking and finance news on our blog here.

Get in touch

If you have any questions about Ulster Bank exiting the Irish market, we’d be happy to help! 

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