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Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach debate -
Tuesday, 23 Feb 2021

Banking Matters: Discussion

Today's meeting is an engagement on Ulster Bank. We are joined remotely, first by representatives of the Financial Services Union and then by representatives of Ulster Bank itself. The opening statements are taken as read. They will be published on the committee's website. The witnesses will have an opportunity to make some short comments before we begin our questioning of both groups.

First, from the Financial Services Union, we have Mr. John O'Connell, general secretary, and Mr. Brian McDowell, head of communications and public affairs.

I wish to explain some of the limitations to parliamentary privilege and the practice of the Houses with regard to reference that witnesses may make to other persons in their evidence. The evidence of witnesses physically present or who give evidence from within the parliamentary precincts is protected by absolute privilege, pursuant to both the Constitution and statute. If, however, they are giving evidence remotely from a place outside the parliamentary precincts, as such, they may not benefit from the same level of immunity from legal proceedings a witness physically present would. They are reminded of the long-standing parliamentary practice that they should not criticise or make charges against any person or entity by name or in such a way as to make him, her or it identifiable, or otherwise engage in speech that might be regarded as damaging to the good name of the person or entity. Therefore, if their statements are potentially defamatory to an identifiable person or entity, witnesses will be directed to discontinue their remarks. It is imperative that they comply with any such direction.

Members are covered by privilege if they are in Leinster House, but if they are outside it, they do not enjoy the same privilege. I invite Mr. O'Connell to contribute and to note that because of time constraints we want to finish this session as close as we can to the half hour scheduled for it. Then we will move into the second part of the meeting, as per the notification received for the next part of the meeting.

Mr. John O'Connell

I thank the committee for allowing us to address it today. I also take the opportunity to thank the committee for its interim report, which resulted in us being here today. I welcome the opportunity to address the committee today, although I truly wish the circumstances were different. I believe that for years to come the Ulster Bank withdrawal from the Irish market will be a case study in how not to do change. Rarely, does one have a situation where customers, businesses, trade unions, politicians and whole cross-sections of society concur on their unbelievable treatment by one of the so-called pillars of the banking world, NatWest-Ulster Bank.

It would be a disservice to our staff today if we ignored the behaviour of NatWest towards them in the past six months. There were significant media reports on five key occasions which provided an opportunity for the bank to come clean with staff. That was the case right up to last Thursday morning when the bank issued a report to staff to state that no decision had been taken. It is not conceivable in our minds that the bank was in that position at that time, but that is what was stated to staff. Staff took that information and went home, only to hear the next morning that the bank was leaving Ireland. This behaviour is not acceptable, and it should never be acceptable to any organisation, but that kind of behaviour is continuing from NatWest-Ulster Bank today. A statement from the bank last Friday said there would be no compulsory redundancies in Ireland. Today, 40 staff are fighting for their jobs and trying to stop NatWest-Ulster Bank from making them compulsorily redundant.

The bank was also far from clear with our colleagues from Northern Ireland on the impact of the changes on them. Senior management in Northern Ireland wrote to all staff stating there would be no impact, yet we had to push the bank to make clear to staff that they too would be impacted. A total of 600 jobs in Belfast are affected, which is £25 million out of the local economy. Let us put ourselves in the shoes of those staff last Friday morning. They did not know whether they were coming or going. Their bosses told them that there was no impact, yet they were being told that the bank in Dublin was telling people that those jobs were gone.

We have three asks of the committee. Jobs must follow the work. We must have a situation coming out of this so that when loan books are sold, there is no equivocation or dilly-dallying and it is clear to staff their jobs are safe and they will travel with their work. As I said, there were to be no compulsory redundancies. What does that mean? It does not mean much to the 40 staff in Ulster Bank. We need the bank to confirm today there will be no compulsory redundancies in Ireland full stop. In terms of branch closures, we want the moratorium on branch closures extended. We are in the middle of a pandemic. The UK regulator has called on British banks to stop closing branches. Our regulator needs to stand up and state clearly it will not tolerate branches being closed on the Irish public in the middle of a pandemic.

In its annual report, the bank stated it is considering options with regard to the implementation of a phased withdrawal strategy. We want the bank to make clear what this means. We want people to leave today with absolute clarity as to the bank's intentions. The Financial Services Union, FSU, will be publishing a document on the establishment of a banking forum within the next fortnight. We are doing so because we believe the only way forward for us, as a society, is to have proper debate on what the future of banking holds. We cannot and will not allow banking to be dictated by a number of senior bankers, having no regard to the impact on our society and our communities. We will share that with the committee in advance of publication. Having reviewed it, we would like the committee to be in a position to support it.

There is a lot of change afoot in banking. KBC closed 25% of its branch network within two months. Staff and customers were compulsorily disengaged. AIB has announced cuts to jobs and staffing levels but is engaged in constructive dialogue with us. The sale of hundreds of ATMs to the highest bidder has recently been announced and it has also been announced that banks may start charging customers for the privilege of having their money held. What is missing from these announcements is any prior dialogue with consumer, staff and business representatives. Change can be positive, but it must be agreed change. That is why we believe a stakeholders' forum is vital.

I will bring one final thing to the attention of the committee, the media reports circulating about significant branch closures in Bank of Ireland. That is why we are calling for a moratorium. Bank closures should be paused for the duration of the pandemic. It would be of great benefit to staff and customers if the committee could consider inviting Bank of Ireland to a meeting at a future date to explain its rationale. I thank the Chairman for the opportunity to address the committee.

I thank Mr. O'Connell for his opening remarks and for the statement he provided to the committee prior to this engagement. This was a devastating blow for staff. As somebody who worked in the banking sector before taking on this role, I understand that it is a very worrying time for people who work in banking. I hear what Mr. O'Connell is saying in that regard. I have been contacted by a number of people who work in Ulster Bank and the big concern they have raised with me is that there will be compulsory redundancies rather than voluntary redundancies. I would be interested to hear if this is also the sort of feedback the FSU is getting from its members. Mr. O'Connell mentioned this issue in his opening statement but I would like to know if it is a concern that is coming through from the union's members.

Another issue Mr. O'Connell has mentioned is that this has been worrying staff for a number of months. He was before this committee previously and we had that level of engagement but the reality is that this has had a great impact on staff mental health. Is that something Mr. O'Connell has also come across? What impact has the lack of engagement prior to this announcement had on the staff? I am thinking of all of the staff and all of the FSU's members because it is a very difficult time. As Mr. O'Connell said, it is a difficult time for people working in banking.

Mr. John O'Connell

Will I address those questions now?

We will take questions from some more of the members first. Otherwise, we will not finish the list. I will go through a number of members first and then return to Mr. O'Connell.

I thank Mr. O'Connell for his presentation. I have two relatively brief questions but I also fully agree with my colleague, Deputy Farrell. This has been an extremely tough time for the many staff who have been in touch with my office.

My first question is about the FSU itself. What sort of representation or guidance is it providing not only for staff generally but for contract staff in particular who may be affected differently from full-time staff? While I expect there has been no engagement as of yet, what engagement does the FSU hope to have with the bank and the group with regard to the pension entitlements of current staff and the pensions of former Ulster Bank staff?

I concur with what my colleagues have said. This has been an absolutely devastating period for Ulster Bank staff, who have had the sword of Damocles hanging over their heads for many months. It is quite frankly outrageous that staff had to learn of their fate and that their jobs were at risk of coming under threat from media reports. I notice that Ulster Bank's own statement, which it will make later on and a draft of which we have seen, makes reference to media speculation last September. It is clear that somebody must have been briefing the media for the story to have appeared about the future of Ulster Bank and consideration of its operations in this country. Ulster Bank has to take responsibility for that. I am absolutely amazed that staff are expected to accept the notion that a decision on the future of Ulster Bank had not been taken until last Thursday and early Friday morning. As my wife would say, I am not the most organised person in the world but even I try to organise what I might wear the following day the day before. Nobody should be expected to accept the notion that a major bank of this scale would make a decision of this magnitude literally overnight.

I will ask a couple of questions, if I may. The first relates to the conduct of the Central Bank. Will Mr. O'Connell elaborate on any contact he may have had with the Central Bank regarding any advice and support the FSU might have tried to obtain with regard to contact between Ulster Bank and the Central Bank on the Central Bank's consideration of Ulster Bank's next steps in advance of the announcement made last Friday?

I welcome the FSU's commitment to the concept of a banking forum. Would it agree that this should operate along the lines of the retail consultation forum established by Government in 2014, in which I had some involvement myself? Would it agree that it will be important to include not only bankers and experts, but also experts drawn from the workforce in banks across the State, who could contribute enormously to the future banking landscape of this country?

I thank Mr. O'Connell very much for his presentation. I express my sympathies to all of the staff of Ulster Bank, who are obviously going through a very stressful time. I appreciate the concern Mr. O'Connell has for those staff. I note that he has stated he believes they have been treated shabbily. I have to agree with what he has said. His statement was very clear in setting out the FSU's asks of this committee and what it would like us to put to Ulster Bank. These include that jobs must follow work, that there must be no compulsory redundancies and the issue of bank closures.

I will ask a more general question on the future of banking in Ireland. It is of concern that we have lost a competitor in the banking sector in Ireland and that, once again, the State will become an even more dominant player in that sector because of the assets it holds in AIB, Permanent TSB and Bank of Ireland. What does Mr. O'Connell think can be done to make Ireland more attractive to banks that may wish to open here? I have no doubt that one of the arguments banks will make is that the exceptionally high levels of capital that banks are required to hold against mortgage loans deters banks from setting up or remaining here. I know it is not the function of a union representative to answer such questions, but I would be interested to hear what Mr. O'Connell believes are the barriers to banks remaining in and entering the market.

I thank Mr. O'Connell for coming before the committee again. It is very clear that all of the issues he had previously flagged to us have come to pass. I also agree that it is clearly not plausible that this decision was only made last week. I was struck by the fact that Ulster Bank disbanded its sustainable banking committee in December. This really points to the idea that sustaining the business has not been a priority since December and that it was really more the manner in which it would withdraw.

Will Mr. O'Connell elaborate on a couple of key issues? He mentions his concern that there may be compulsory redundancies this year. Will he clarify what he needs as regards assurances on the question of compulsory redundancies, how they might be avoided and how it can be ensured that any redundancies in the future are proper redundancies?

I know there had been plans regarding senior executive accountability but it has not progressed. What should we be driving forward in that senior executive accountability regime, specifically the question of responsibility mapping for senior decision-makers and governance? Do the witnesses have a sense of transparency about where responsibility for decision-making is in Ulster Bank?

Another concern which we will be discussing with Ulster Bank is about non-performing loans and distorted figures being used when addressing the question of non-performing loans. Have the witnesses concerns about a skewed assessment of the viability of different branches based on assessment over the past year with regard to transferring branches as viable businesses? Will they speak to what they think is important to ensure a picture skewed by the pandemic does not inform the decision-making and options presented for workers and the area? I say this as somebody who, very recently, perhaps coincidentally, was contacted by a polling company to ask how often I use my local branch of Ulster Bank. I said I use it once a month and the company asked if I do that right now. I said maybe not right now. It is an interesting point because we need to look to viability wherever possible.

I thank Mr. O'Connell for his presentation. I appreciate it is a difficult time for the Financial Services Union and the more than 3,000 members and staff when one includes those in the North, whose futures are not secure. In his opening statement, Mr. O'Connell said that NatWest and Ulster Bank's recent actions in this context are a humanity failure, decency failure and respect failure. It would be hard for any of us to disagree with that with regard to the way it handled this announcement and indeed the communication sent to members of staff, which clearly was not an accurate reflection of what was happening at the time.

Where do the witnesses think the best outcome lies to secure the three points they have raised with regard to staff, no compulsory redundancies and the maintenance of as many branches as possible? There is a proposal that Permanent TSB would become a third force in Irish banking. It is a small bank relative to AIB and Bank of Ireland. Does Mr. O'Connell see that or any other option as a better option to try to secure the three outcomes he has suggested? Regarding the memorandum of understanding we understand has been entered into by Ulster Bank and AIB, it is suggested there are 300 staff who would be aligned with that memorandum. Has the Financial Services Union had any engagement with Ulster Bank to confirm the number of staff who would be assigned to any portion of loans that would be sold to any other banks? Has it had confirmation from Ulster Bank that it will ensure staff transfers with all the other parcels of loans that will be broken up?

Gabhaim buíochas le Mr. O'Connell for coming in today and having this discussion with us. It is a disaster for the workers of Ulster Bank. It is obviously a disaster for customers and it is going to be a disaster for regional and rural Ireland, especially that last paragraph Mr. O'Connell discussed, which shows the traction of the physical presence of all the banks. It is shocking, given what the workers in Ulster Bank have done over the difficult past ten years to keep the show on the road when the bank was under such pressure, that the workers have been kept in the dark. It went on until the last second and it is outrageous. For me, this is part of the dysfunctional banking market we have. The fact we have a duopoly in this country is making it increasingly difficult for workers and customers.

Have there been any negotiations with NatWest to date? Is there any structure in place for those 47 workers who are at immediate threat of redundancy? Has the Government provided any supports or actions to date with regard to the predicament the Financial Services Union is in? Have any details emerged from the bank in its negotiations with Permanent TSB or any other banking organisation? I do not know if Mr. O'Connell has heard of a danger of vulture funds being involved in the purchasing of elements of this bank. Has he heard anything in that regard?

We all acknowledge, empathise with and support what the union has just told us. We should thank it for its positive and informative actions despite the fact the opposite side decided to ignore it and us. A couple of things worry me. I fully support having no compulsory redundancies because they should not be necessary. If services are going to be carried on in the future, I do not see why staff should not have a safe place to go to carry on with the business they did before.

What does "phased withdrawal" mean? That is a dangerous term because it could mean a piecemeal reduction in staff and services over a period of time, after which there would be few options left for the staff or the bank to function. I draw attention to the pivotal nature of the services provided by Ulster Bank right across the midlands, a significant area with a branch network providing lending services.

Other speakers referred to the non-performing loans. By whose definition are they non-performing? In my experience, the non-performing status was determined by the bank. That allowed banks to put such loans into a package. Some loans were not non-performing at all and were performing quite well but ended up in a package for sale to sweeten the package for somebody else.

Those are the three issues I have concerns about. I hope this move is not Brexit related. I worry there could be some origins there. That might carry on. How quickly can we get an indication from the various banking authorities here about something that might resemble a third banking force where Ulster Bank could create a major player?

On 2 February, we were informed that the Minister, Deputy Donohoe, had met with representatives of Ulster Bank and its parent company, NatWest. He met the representatives of Ulster Bank again on 21 October. It was seen that, from last year, the Government was aware of what was going on and was in discussions with NatWest and Ulster Bank. The Minister indicated he met with the chair of NatWest, Howard Davies, on 17 December 2020. What engagement did the Government have with the unions about this matter? Was it in contact with the Financial Services Union? Did it offer the same time to meet with it? Has the Government expressed any opinion to the union's representatives about what is happening? Mr. O'Connell might brief us on those meetings if he has had any.

Mr. John O'Connell

I will answer the Chair's questions first.

We have engaged with the Minister for Finance and the Minister of State with responsibility for banking and insurance since the announcement was made. We have had a number of meetings where we outlined our concerns, much as we did to this committee, and highlighted the areas. At that stage, we felt and still believe that the bank could be saved. We made those representations to the Minister, met with him last Friday morning after the announcement was made and reinforced our position regarding the points we raised around work following the transfer of loans, compulsory redundancy issues and a moratorium on branch closures during the pandemic. In terms of the-----

There was a first meeting but there were meetings at the end of last year.

Mr. John O'Connell

The exact date escapes me but we did-----

The FSU did meet with-----

Mr. John O'Connell

Not subsequent to the Minister meeting the chairman of NatWest - we were engaged with the Minister but did not have a physical meeting.

In response to Deputy Durkan, I agree that Ulster Bank has a huge presence in the midlands.

In response to Deputy Doherty, the best outcome for Ireland is the arrangement involving Permanent TSB and AIB that is being developed. Those proposals would allow us to retain as many jobs and branches as possible in Ireland and the skills that go with a bank like this. Ulster Bank in particular is known for its skilled lending staff in respect of the SME sector and so forth so we need to hold on to these skills.

I answered Deputy Tóibín's point about the Government. We had an initial meeting with the bank today and made our position very clear, particularly with regard to those 40 individuals who heard the first announcement last Friday and felt they got a reprieve only for that to be dashed on Monday. Those staff are in everybody's thoughts and the bank must do the right thing by them.

In terms of removing bank branches, we are in the fourth quartile of digital maturity in Ireland. We are not there yet. We are trying to develop broadband in rural areas. The reason put forward for closing branches, namely, that people go online, is not relevant to the communities that will be hit by branch closures. It is not city centres and areas where there is good broadband coverage that are under threat - it is rural areas. The members saw the reports last week about east Clare and so forth in respect of places under threat. To go back to Deputy Doherty's point, it is a very delicate situation but we believe the best outcome involves the Permanent TSB-AIB-type proposals that solidify banking, create a third force and give a future in terms of competition.

We have a very strong position on vulture funds - no more than all the members. Our experience is a very bitter one and we do not want it repeated in Irish banking. We see no reason it would be repeated.

In terms of the 300 staff, we did not put the figure at 300 staff and I do not know who is pushing that number. It is not helpful at this stage to push numbers when we are at the preliminary stages of a change programme. This is why the bank making it clear what the options are, as it says in its annual report, would be really beneficial to this process. Our position is quite simple.

In respect of a senior executive accountability regime and timelines, our view is that the sooner it happens the better. Fining banks is irrelevant. All studies have shown that in respect of culture change. Fining bankers has an effect but fining banks has no effect on changing bank culture. A senior executive accountability regime is an important part of that. It is interesting to note that the banks did a survey through the Banking Federation of Ireland that showed that post pandemic, significant numbers of people will return to branch banking. One of the most interesting facts is that the younger generation by a percentage of 83% would return to branch banking. This is the banks' own survey so why would they close branches when they have that information in terms of surveys?

We believe that now is the time for a debate on the future of banking. In respect of Deputy Jim O'Callaghan's question on what would make it more attractive, this is why we need a full debate on what model we want and what we want to attract. There are other models of banking out there that do not strive to make profits over profits. They look to have a sustainable banking system. We want a debate in Ireland with all stakeholders around the table and, as Deputy Nash said, modelled on the retail consultation forum that would provide it with a bit of order and allow for a discussion.

In respect of Deputy Mairéad Farrell's points, the orderly wind-down is something we will work with as long as the bank changes its behaviour. The behaviour displayed right up to and beyond the announcement is not acceptable. We will commit to an orderly wind-down. We are not interested in causing any disruption to the banking system but this is contingent on the banks behaving in a manner that is reflective of us as a society and not just driving on with change regardless of the impact on communities and jobs. One of the points made by Deputy Mairéad Farrell is probably one of the most relevant and one I understand the bank will confirm today. It relates to the impact on the mental health of staff. Week after week, staff asked questions. They were given information to give to customers that they told us they did not even believe so how could we expect the customers to believe it? As time went on and the questions grew louder, people were impacted. I believe the bank will confirm that today. There are regulatory authorities in terms of how health and safety at work is governed and they should seek a copy of this committee's deliberations in that regard in respect of staff's health and safety. It is a really important issue. It was clear that the way the bank decided to do this and the behaviour it displayed was all about protecting the bank and that staff and customers were left hanging out to dry.

I thank Mr. O'Connell. We have dealt with the issues. I thank the witnesses for their attendance today. We will take a quick break to transfer over to the next session.

Sitting suspended at 4.37 p.m. and resumed at 4.38 p.m.

I remind everyone of the notice regarding privilege. Witnesses who are giving evidence within the precincts of Leinster House or the Convention Centre are covered by privilege. Those who are not have limited privilege. Witnesses are reminded of the long-standing parliamentary practice that they should not criticise or make charges against any person or entity by name or in such a way as to make him, her or it identifiable or otherwise engage in speech that might be regarded as damaging to the good name of the person or entity. Therefore, if their statements are potentially defamatory in respect of an identifiable person or entity, they will be directed to discontinue their remarks. It is imperative that they comply with all such directions.

As I indicated earlier, the statement from Ulster Bank will be taken as read and will appear on the committee's website. The representatives of the bank will be given an opportunity for a brief introduction. I call Ms Jane Howard to make some opening remarks.

Ms Jane Howard

I am joined today by our chief financial officer and deputy CEO, Mr. Paul Stanley, our director of human resources, Ms Derval McDonagh, and our director of corporate affairs, Ms Elizabeth Arnett. I understand we are constrained in respect of time, so rather than read the full statement I will emphasise six points.

In the context of this decision, there will be an orderly, phased withdrawal that will take place over several years. There will be no immediate change for customers, with full banking services continuing across all channels for existing and new customers. We will not be closing any branches this year on the back of the announcements. There will be no new compulsory redundancy departures this year. We have announced a non-binding memorandum of understanding with AIB for the sale of the portfolio of performing commercial loans of about €4 billion and the transfer of colleagues who are wholly or mainly assigned to this loan book. We have also confirmed that we are in discussions with PTSB, among other strategic banking counterparties, regarding certain retail and SME assets, liabilities and operations. Our preference is to continue to focus our discussions with counterparties that can provide customers with full banking services in the Irish market.

The past five months have been very difficult and upsetting for our colleagues and our customers. The uncertainty that the review has brought, combined with the ongoing pandemic have been extremely challenging. Speculation appeared in the media in September and we were left in the difficult situation of not being able to update colleagues, which would be our preferred way of doing things, due to the fact that the review was under way and not completed and its outcome was uncertain. There was a requirement to conduct discussions in a manner that ensured commercial sensitivity and confidentiality. In the latter stages of the review process we were subject to additional restrictions that prevented us from discussing the review further until there was a board decision that could be publicly announced to the market.

I thank the members of the committee and we are now happy to take questions. I caution the members, however, that some matters that may be raised might be commercially sensitive and could impact on negotiations which are under way regarding the transfer of parts of our business. It would be more appropriate to discuss those aspects directly with the staff representatives.

I thank Ms Howard. There was some interference during her contribution, so I remind members and witnesses to put their devices on mute if they are not contributing. I call Deputy Tóibín. I remind him of his time and to use it efficiently.

How would the Chair like us to use our time? Would he like us to go back and forth with the witnesses or to pose all our questions first?

I would like the Deputy to pose some questions first and we will then see where that leads us. I am anxious to allow as many members as possible to contribute. I have a list of speakers

That is fine. I thank the witnesses for coming in to discuss this matter with the committee today. We have heard from the representatives of the workers. I put on the record that I think the way workers have been treated is outrageous. They were not engaged with until the last moment and were kept in the dark. We were told some 40 workers are fighting for their jobs and against compulsory redundancy. Will the witnesses enlighten the committee about the status of those workers and perhaps give a commitment that there will be no compulsory redundancies in their case?

Regarding the withdrawal of NatWest Bank from the Irish market, in the past decade the bank sunk a great deal of money into bad loans and capital write-offs and losses and invested in technology and corporate restructuring. Why was a decision made to withdraw now? Is it a case of NatWest Bank believing there will be future losses? Are the prevailing interest rates and current financial structure of the market prohibitive for continued engagement? Has the Irish Government worked with the bank in any way to try to provide some level of structure to make continued engagement in the Irish market possible?

We have heard from the representatives of the workers regarding the virtual wholesale reduction of the physical presence of Ulster Bank in the State, especially branches in regional and rural areas. Was that an element of the decision made by the bank? What is likely to be the future of such physical engagement with rural and regional Ireland, and elsewhere as well? I would appreciate it if those questions could be answered first.

I will follow on from the points made by Deputy Tóibín and I thank him for raising what I have written down. The witnesses will find that many of us have the same questions today.

There is a reference in the written submission we received from Ulster Bank to the lessons that can be derived from this extremely regrettable decision by the Irish banking sector and, crucially, by the Irish Government and the Central Bank of Ireland. Regarding engagement that may have taken place with the Government, how many times did the CEO of NatWest Bank meet with representatives of the Central Bank of Ireland in the past year? Were they able to discuss this matter and address concerns?

Regarding the staff and the treatment of workers, I am concerned about the pensions of those staff who have already retired from Ulster Bank and how current staff may be impacted in this regard. Another important point was brought to my attention by an 85-year-old resident of Dundrum who contacted me because she was wondering if her ATM card will continue to work next Monday in the bank. People are also wondering, more forcefully, what will happen to their mortgages and business accounts. What is Ulster Bank doing now in respect of those who want to switch? How is that process being facilitated, how is Ulster Bank working with those customers who have very understandable concerns about the future of their bank accounts and what more can be done?

Like everyone else, we are extremely disappointed by this move. I appreciate this is disappointing for all of the workers in Ulster Bank and that includes the witnesses, so I do not want to sound cold in my comments either.

Frankly, to a greater or lesser degree, we are all disturbed about the treatment and experience of Ulster Bank staff in recent months. They had to read about the potential risk to their jobs in the newspapers as far back as last September. Over the past ten to 15 years, Ulster Bank staff have experienced what could be termed restructuring fatigue. The witnesses will be aware of this situation, given all the processes which the bank instituted in recent years regarding consolidating the business.

Reviews and strategic reviews generally involve the whole of the business. It is clear to those of us who have been following this matter closely, and of course to the FSU, which represents the bulk of Ulster Bank staff in Ireland, that there was no engagement worth the name with the staff of Ulster Bank. They are the people most immediately affected by the decision NatWest has made to exit this market.

Frankly, the way the parent organisation, NatWest, and the witnesses, as direct employers, treated staff in Ulster Bank was an insult. The staff deserved better. I hope the witnesses will acknowledge that point and that the staff do deserve better. I also do not accept that the staff should be expected to accept the statement made by the bank last Thursday regarding no decision having been made. That statement came only a matter of hours before the formal announcement of NatWest Bank's decision to exit the market. That is regrettable, and the witnesses might address this matter in detail when they respond.

Would Ms Howard agree that for the duration of the pandemic, there should be no bank branch closures for the reasons outlined by the UK regulator, which regulates the parent organisation NatWest? Given the bank's attitude to its staff and customers and the way it has behaved in recent months, it is fair to say that the organisation is paying lip service to any attempts we are making to change the culture of banking in this country. In that regard, does Ms Howard believe she should resign from the Irish Banking Culture Board given the experience in recent months?

What kind of engagement has Ulster Bank had with the regulator in recent months when it was considering this decision, which appears to have all the hallmarks of a fait accompli? I regard the strategic review as merely a cosmetic exercise, as do most of the staff.

I thank the officials from Ulster Bank for appearing before the committee. I believe the Ulster Bank staff have been treated shabbily by the bank. I will not repeat some of the questions that were asked by my colleagues earlier, but I ask that they would also be answered. As well as being a great disappointment and a cause of strife for the staff and customers of Ulster Bank, this is also a very significant decision from the point of view of the Irish public and indeed banking in Ireland. We will now have a banking sector that is less competitive and has more dominance by the State within the three banks in which the State has shareholdings.

I ask this question of Ms Howard. Why does Ulster Bank believe it is necessary to leave the Irish market? I know that the chief executive of NatWest, Ms Rose, stated that the bank was unable to generate sustainable long-term returns for its shareholders. I suppose being blunt, that means it was not satisfied with the level of profits that could be made by Ulster Bank. Why was NatWest in the UK able to deliver a return of 9.4% on equity across the group and yet Ulster Bank in Ireland was only able to deliver a return of 2.3% on equity in 2019? Is the high level of capital that banks in Ireland are required to hold against mortgage loans a factor in Ulster Bank leaving the Irish market? Was the elevated level of risk-weighted assets required for Irish banks a factor that contributed to Ulster Bank's decision to leave the Irish market?

Does Ulster Bank believe that another recession may be coming and is it concerned about its loans in the Irish market because of the historical failures with loans made here previously? I would appreciate an honest assessment as to why Ulster Bank is leaving. Ulster Bank has been in Ireland for 170 years. Why do banks that come to Ireland or stay in Ireland seem to find it more difficult to make profits to the same extent that banks in the UK or in other European Union countries can?

I apologise for being slightly late and this question might have been asked. I thank the representatives of Ulster Bank for appearing before the committee to take our questions today. Did Ms Howard, as CEO of Ulster Bank, or Ms Alison Rose, as CEO of NatWest, seek a meeting with the Governor of the Central Bank of Ireland? If so, how many times did she request a meeting and what response did she get from him?

How is Ulster Bank applying the customer protection code? What is it doing to inform customers of their rights under the code?

As others have said, the way that this has been handled is extremely disappointing. The treatment of customers and staff has been unacceptable. I question the idea that a final decision had not been made because it is very clear that many decisions were being made. I ask Ms Howard to comment on the withdrawal from the sustainable banking forum and the disbanding of Ulster Bank's sustainable banking committee in December. Was it at that point that it became clear that sustaining of banking services in Ireland was no longer on the table? Over the past two or three years Ulster Bank has sold a substantial number of its loan books. In particular, €800 million in non-performing loans were sold to the US vulture fund, CarVal.

Ms Howard spoke about the performing loan book. My concern is over what gets categorised as non-performing. In the case of that loan book, some of the properties that were categorised as non-performing had been non-performing for just 12 months. Given the pandemic, is there a danger of a large number of loans being categorised as non-performing? Is Ulster Bank considering selling the non-performing loans to vulture funds? What screening will it apply to ensure it does not skew the assessment of non-performing loans?

I am also concerned about branch closures. We have heard of listening exercises. The bank needs to engage with a number of people and not simply listen to them. In those smaller decisions along the way, how does Ulster Bank plan to be more active in engaging on decisions before decision points? For example, Ulster Bank customers have been told that if their mortgages are being transferred to a new provider, they will be told in advance by letter and email. How far in advance will they be told? Will there be a mechanism to allow them to transfer their loan if they would prefer not to have it transferred to a provider of Ulster Bank's choosing?

I am also concerned about loan schemes, including the micro credit guarantee scheme, the Covid-19 guarantee scheme and business loan schemes, where the State has supported Ulster Bank's lending. Is that something that has been looked at and engaged with?

Ulster Bank has very significant landmark properties in a number of parts of Ireland, including Sligo, Letterkenny and Kilkenny. Is there engagement with local authorities as well as with banks on those properties? We hope those branches will remain active as bank branches. There are many decisions within these decisions. It would have been constructive if there had been engagement on the many decisions that led us to this point. It is important to have engagement with all relevant stakeholders in the decisions that come next. I ask Ms Howard to address that. I also ask her to address how non-performing loans will be approached. Is it Ulster Bank's intention to engage with vulture funds?

Ms Howard said there would be no new compulsory redundancies. As others said, I hope that Ulster Bank will give us a commitment not to carry out branch closures during the pandemic and not to have compulsory redundancies during the pandemic especially given that we know there are limits on redundancy entitlements during this time.

I welcome Ms Howard to the committee. We are meeting under very difficult and disappointing circumstances. I echo the sentiments of my colleague and I think the committee speaks as one. What NatWest and Ulster Bank did to its staff was deplorable and unacceptable, and it should not have happened. Can Ms Howard give the committee an assurance that Ulster Bank is not in negotiations or discussions with any so-called vulture fund on the sale of any of the loan book in the Ulster Bank portfolio?

Can she give us a commitment that will continue? Will the bank management also outline to us the composition of the Ulster Bank loan book and in particular what portion of it is tracker mortgages? The figures we are trying to put together indicate that the loan book is in the region of €21 billion with €14.5 billion of that being mortgages, of which €6.5 billion are tracker mortgages. I see some of the witnesses are nodding. If those are the figures, are there any discussions on the tracker mortgage book, which may not be the most sought-after book in the market? Can the management give us any breakdown, perhaps subsequently in written form, on the composition of the loan book both in terms of mortgages but also the business loan book and what portions of it are performing and non-performing?

I understand that the memorandum of understanding the bank has entered into with AIB concerns €4 billion of the loan book. I would like to hear some detail about the composition of that. From the figures we have, the business book breaks down into just over €6 billion with €3.4 billion being corporate, €1.3 billion specialised and €1.6 billion in SME lending. Is AIB just looking at the cream, the corporate and specialised business, or does this involve some of the SME lending as well? I would appreciate getting some of the figures on that, where the memorandum of understanding is concerned.

Ulster Bank's decision to withdraw is a terrible one for staff, for customers and for the regions dependent on its branches, but it is also a terrible one for banking in this State. It is a great decision for the investors in NatWest because they will now reap €4 billion of freed-up capital, which is going to see dividends to shareholders increase at the expense of the banking system in this State, and at the expense of the people who fattened up this bank for over 160 years and who made millions and billions of euro in profit during the period for its shareholders, investors, senior staff and all the rest. It is going to be a very difficult time. Has there been any initial assessment within the bank of the competition issues which may arise, particularly from the memorandum of understanding with AIB? I ask because AIB and Bank of Ireland will now have over 90% of SME lending in the State and challenges could arise from there.

On the staff, has an assessment been done within the bank of the portion of staff who can be assigned to each of the loan books? I refer, in other words, to the portion of staff who would be assigned to the €4 billion which is under consideration by AIB and the portion who would be assigned in relation to the tracker mortgage book and other books. Has the bank given an undertaking that it will sell those loan books in accordance with the current transfer of undertakings legislation, under which staff follow the loan books? I ask the management to outline to the committee what will happen to the 600 staff in the North who are servicing the workings of the bank in the South.

Finally, Ulster Bank had significant problems. We dealt with the bank as part of the tracker mortgage scandal. It was probably the worst in the class when it came to putting money back into people's accounts, making the payments and so on. That has now been dealt with. There were also huge technical glitches with the bank. The bank had a larger risk-weighted assets ratio than any other bank in the State and therefore it was obliged to carry a huge amount of capital. Is that not the core reason the bank is withdrawing from the State? If we had capital ratios which were close to the European norm or indeed to what is happening in Britain, would NatWest's decision on Ulster Bank have been any different?

I wish to ask questions on three topics: profits and profitability, the vulture funds, and the workers and their treatment.

On profits and profitability, is the bank withdrawing from the Irish market because it is unprofitable - profits are not being made in the market - or is it withdrawing because sufficient profits are not being made from Ulster Bank's operations in Ireland? I understand a sum of €3.5 billion in surplus capital has been transferred by the bank to NatWest over the course of the last four years, approximately. I would like to hear how the management justifies the exit from the Irish market and all that means in terms of precarity for over 1 million customers, the communities serviced by 88 branches and nearly 3,000 workers. How can the pressure being placed on all those people - customers, communities and workers - be justified when €3.5 billion in surplus capital has been transferred to the UK operation over the last four years?

What discussions have been had or contacts made with the vulture funds concerning the sale of the bank, or any portion of it, since the process began? I have a very specific question. Whatever discussions have taken place in the past, I ask for a commitment that from this point on the bank will give a commitment to the people that it will not sell the bank, or any portion of the bank or its operations to a vulture fund or funds. Are the management willing to give that commitment to the committee today?

On the workforce, the 2,800 affected workers have been treated appallingly by the bank. One level upon which the appalling treatment can be measured is the negative impact of recent events on the mental health of the workforce. Would the management accept and will it comment on the adverse mental effects this saga has had on those workers? Does the management accept that the way this is playing out has had an adverse effect on the mental health of those workers? There are compulsory redundancies lined up and whatever about next year, I ask the management to comment on this and give a commitment that there will not be any compulsory redundancies in this process. Those are my questions.

I thank the Ulster Bank management for coming before the committee. They should not feel aggrieved. This is not a personal issue; it is something that concerns banking facilities in the country. We appreciate that some of the witnesses may themselves be negatively affected by the proposals as well. We appreciate also that 40 or so people were identified as being redundant from the start and we sympathise.

I know sympathy is not a great deal of benefit to anybody but let it be restated that we, the humble representatives of the people, have two gripes, for want of a better description. The first concerns the reluctance of NatWest and Ulster Bank to speak to this committee beforehand. This is something that could easily have been done. Even if it was only a public relations exercise, it would have been an indication that they were human, concerned and willing to meet the representatives of the people in order to reassure them, but that was not the intention.

I raised the notion of a "phased" and "orderly" withdrawal with the unions earlier. I do not believe there is such a thing. I believe the intention is much more harsh than that and I am concerned about it. It will create serious problems for industry, for banking and for a resolution of this particular issue. If possible, I want to identify the witnesses' interpretation of a phased, orderly withdrawal. I am not so sure that is possible or even intended. I ask that there be no progression of branch closures during the Covid pandemic, which is both a health and economic crisis. We can ill afford to have to deal with yet another problem at this time.

The Central Bank has been raised on a number of occasions. This committee met representatives of the Central Bank which seemed to be, like us, unable to engage resolutely with NatWest or Ulster Bank in terms of identifying how best to transfer. A lot of my constituents are customers of Ulster Bank. There is a huge network of branches across my constituency. From the east coast of Ireland, through the centre of the country and across to the west coast, Ulster Bank has a significant presence and there is enormous dependency on it. Where is that business going to go now? My worst fear is that the business will be broken up under various headings, some of which will be saleable and some not. It may be possible to create a third banking force within the country which, in turn, will be able to carry on business in the same way that Ulster Bank did in the past.

Finally, I wish to refer to the administrative changes taking place and the move towards centralisation. This situation may well be seen by the other pillar banks as an opportunity for increased emphasis on centralisation, with everybody moving to a national hub and speaking from there, out to the people. That would be a bad decision in my view. Withdrawing from the people from whom the banks gain their profits is not a good thing to do. It is highly suspect and I would have a strong objection to it. Perhaps an orderly, phased withdrawal will result in an attempt to make an alternative banking system available to the people who were previously served by Ulster Bank. The same provision should also apply to the staff of Ulster Bank who have faithfully discharged their duties in this country and will continue to do so in an any entity that is found to be fair.

There were a number of speakers before me and if there is one thing I dislike, it is repeating questions that have already been asked. I will try not to do that. I welcome the fact that the witnesses have come before this committee today. I know this is something that we had asked for. The witnesses acknowledged that in their opening statement. We had been asking that they appear before us for some time because this has been a very worrying time for staff who have been dealing with a huge amount of uncertainty. In our engagement earlier today with the unions, I referred to the very real impact this must have had on the mental health of staff and the unions agreed. The fact that there was not earlier engagement and that information was being leaked to the media has had a huge impact on the mental health of staff. It is outrageous that they were hearing about their livelihoods from the media. This should never have been the case, especially in these already uncertain times, both economically and personally for everyone.

Some staff have raised with me their concerns in relation to compulsory redundancies, which was also raised earlier. The opening statement refers to the fact that the risk ratios and capital requirements inhibited the bank's ability to make a profit. Would the witnesses argue that the risk ratios and capital buffers, which I am not suggesting are not necessary, put the bank at a competitive disadvantage relative to other banks who did not have such requirements? I would also be interested to hear who, apart from the two main pillar banks, the witnesses would have seen as Ulster Bank's biggest long-term competitor if it had stayed in the Irish market.

I have been contacted by a number of people who have mortgages with Ulster Bank and they are very concerned. What is the status of customers who have been given mortgage approval in principle? What is the situation with regard to switching lenders for those customers who do not want to have their mortgages sold to a purchaser of Ulster Bank's choosing? Will such customers have to pay switching costs or will those fees be waived?

I wish to add a few more questions to the list. Goldman Sachs apparently had a role in this decision. What were the terms of reference given to Goldman Sachs? What was it asked to investigate? What was its role? Is it too late to reverse this decision? Do the witnesses think the decision was the correct one? Do they have a view on it? Do they have a view on the work undertaken by Goldman Sachs?

I wish to turn now to the meeting with the Minister for Finance in October 2020 and the meeting between Howard Davies of NatWest and the Minister on 17 December. At each of those meetings, the importance of the staff and of the bank to the Irish economy was stressed by the Minister. The decision that has been made is an appalling one that will have wide-ranging effects on the Irish economy and the SME sector. The next steps that Ulster Bank takes will decide the future of many businesses in this country. Therefore, the Government should have been far more vigilant. I would like to have further engagement with the witnesses on those next steps and how the bank is going to deal with these matters. What is the nature of the understanding with AIB? I note that it is a non-binding understanding; likewise with Permanent TSB. What does the bank intend to do about its difficult loans? Will it enter into discussions with the likes of iCare Housing or Home For Life? Will it enter into discussions with those that are broadly accepted as ethical funds? When I say "ethical funds" I do not use the same definition as AIB because it dealt with a fund recently that is far from ethical. What plans have been advanced to deal with distressed loans in Ulster Bank? In the last few weeks we have received emails from customers of the bank about home possessions. The legal firm representing the bank has been contacting various customers.

Some of those customers are elderly and others are sick. Some of them believed they already had an engagement with the bank and an agreement in terms of how they were dealing with their distressed loan or mortgage. Indeed, one of the customers committed suicide and that has to be taken into account. We are talking about mental health here; not only the mental health of staff, but the mental health of customers with whom the bank is dealing. There is no doubt that the actions of the bank have caused further difficulty for some customers. What does the bank do with that cohort of people? It has managed to speak to AIB and PTSB. I hope it has reached out to the ethical funds that would assist in the restructuring of these loans to allow people to get on with their lives.

An article written by Brian Carey and Niall Brady was published in The Sunday Times last week. Its description of how Ms Howard was treated at the most recent meeting of the committee which she attended was interesting. The journalists suggested that the behaviour of the committee and the rough discourse of the parliamentary engagement may have contributed to the wind-down of Ulster Bank. I would like Ms Howard to call out that nonsense. The committee was doing its job and defending the bank's customers and staff at that stage.

My next question relates to Ulster Bank and the properties. The bank owns various branches around the country. Does it actually own the properties or is it leasing them? How are they to be offloaded?

I ask Ms Howard to comment on the issue of commercial mortgages. I understand that, according to the Central Bank, they are included in the tracker scheme. If that is a fact, enforcement proceedings should not commence in respect of those loans. I ask for an update on the general process of legal proceedings within the bank. Will those enforcement proceedings for commercial trackers be stopped? How will the bank engage with that cohort of customers? How will it deal with the legal cases currently under way against the bank, of which there are several? How will that be dealt with? Will it be dealt with by NatWest or by some other part of the organisation?

On the issue of vulture funds, when Ulster Bank sold various loans to vulture funds in the past, was the bank paid hard cash for those loans or does it have an ongoing benefit from the process in terms of a share of profits or whatever arrangement that might be? The committee needs to hear from Ms Howard on that issue because of the numbers now involved.

I call Ms Howard to field those questions. Any member of her team may answer the questions. I ask that the answers be delivered as precisely as the questions were delivered.

Ms Jane Howard

I apologise, but I have not seen the article to which the Chairman has referred. However, it can be put on record that I was treated very respectfully by the committee the last time I appeared before it and I have no problem at all with the way questions were addressed to me or anything else. I am sorry that I was not aware of the article, but I think I have made clear that I was treated very respectfully.

I will be joined by my colleagues in responding to the questions. Several of the questions referred to colleagues. On the issue of communication and the reference to how colleagues have been treated, the way this was communicated was not the way that anybody would have wanted. I have personally apologised to our colleagues for the fact that they have had to live with this uncertainty for five months while dealing with a pandemic and trying to serve our customers in the best way possible. During that time, I have met many colleagues and listened to their concerns. Where we have been able to address those concerns, we have done so, but the biggest concerns most people had related to wanting to know the outcome of the decision. It was that uncertainty that was causing challenges for people, as well as stress in many cases. I absolutely understand how difficult that was for our people. We have got the outcome of that decision. We got it on Friday, 19 February.

When the decision was announced, I announced three things on Friday to try to address some of the uncertainty: first, that there will be no new compulsory exits this year; second, that there will be no branch closures this year; and, third, that under the memorandum of understanding we reached with AIB, although it is only a memorandum and needs to become binding when we get to that stage, colleagues will travel with the work, to use that expression, as long as their role is mainly or wholly associated with it. That gives some degree of certainty, but I am very aware that it does not give all the certainty that people need. We are in the very early days in terms of conversations with Permanent TSB and others. Similarly, the memorandum of understanding is in its early days.

We will be engaging fully on this issue. We do not yet have all the answers, but we will be engaging with stakeholders in the coming weeks and months as we work through how to withdraw from the markets carefully and in an orderly way. Now that we have a decision, we have established regular communication sessions with colleagues. These are two-way engagement sessions. We have large-scale communications through which everybody can hear a consistent message and ask their questions. Obviously, we also have smaller groups because many people prefer to have conversations in a smaller group. That is what we have done.

I absolutely recognise how difficult this has been and still is for those affected until they understand what it means for them. One of our core objectives is to minimise the number of job losses. That is why we have reached the memorandum of understanding with AIB. It will be core to any negotiations we have with banking counterparts here. On that note, I will see if Ms McDonagh, our director of HR, wishes to add anything in terms of the welfare of our colleagues in particular.

Ms Derval McDonagh

I will pick up on the issue that has been raised about the 40 compulsory redundancies that exist today. Several members raised that point. To put it in context, Ulster Bank restructured part of its business last September and, as a result of that restructure, several people were at risk of losing their jobs. Some of those colleagues have secured other jobs in the bank, while others have left the bank on a voluntary basis. Several colleagues remain at risk of compulsory redundancy. It is important to emphasise that we continue to work with those individuals to secure alternative roles for them in the bank.

On the issue of the well-being of our colleagues, there is no doubting the impact of this decision and, indeed, the impact that waiting for it has had on our colleagues. We have quite a comprehensive suite of well-being supports for our colleagues, including mental, physical and financial well-being. It is an issue on which we were very focused for all of last year and on which we are particularly focused this week. That will continue into the weeks and months ahead. It is an issue into which we invest a significant amount of time. We will continue to build on these supports in the weeks and months ahead. We absolutely acknowledge the impact that this has had on our colleagues.

Ms Jane Howard

I thank Ms McDonagh. There was a question about pensions which Mr. Stanley may wish to address. Obviously, we take our responsibilities in that regard seriously due to-----

Mr. Paul Stanley

We absolutely take those responsibilities very seriously.

The pension fund in this area is in a well-funded position. We contacted the trustees last Friday on the back of the announcement to listen to their concerns and to give them confidence, as Ms Howard has said, as to the approach of the bank for the pensioners and for those working in the bank and who are still active. That remains the intention.

Ms Jane Howard

We have covered most of the points about colleagues there, particularly the one about the compulsory redundancies, which I know came up a few times. I will move on to customers, where there were a number of issues raised that will impact them, including things like branches, poor-performing loans, switching, and customers who have got a mortgage which may be in the process of being dealt with. I am going to seek to address those ones now.

Speaking first about our branches, I appreciate that some of this relates to the buildings, although clearly service matters as well to our customers. We are in the early days of conversations with Permanent TSB and the other banks, and this is really about retail banking and our smaller business customers. When I described retail banking in my opening statement, it includes things like mobile banking, online branches, telephony and the services we offer such as current accounts, deposit accounts, mortgages and so on. All of those aspects would be discussed as part of any negotiations. We are only in the early days at the moment. I am conscious this is a very difficult decision on many fronts, especially branches. I know there are certainly two areas where we would have the last branch in a particular town, so that is something that we are very thoughtful about. As I say, it is early days. In terms of our branches and discussions, it is something we would want to be negotiating on because we know how important the branch service is, particularly to customers who may have different vulnerabilities. We are in discussion and engagement, and this point was made very clearly. Now that we have a decision,we will be engaging and it is in our interests to engage on the difficult parts of this decision as well so that we can, where possible, work with and alongside stakeholders to come to an acceptable decision.

As to our branches, some are leasehold and some are freehold, and it will be part of our negotiations also. We are very aware that there are a couple of places at least where our presence there is the last bank, so this is very important. We are in the early days and there are things that will be taken into account and, ultimately, as somebody said already, they may want us to come back. We would be more than happy to come back as and when we work our way through negotiations and come to a point where we have a memorandum of understanding and ultimately arrive at a final decision.

Is there anything Ms Arnett would like to add to that?

Ms Elizabeth Arnett

I thank Ms Howard. One of the committee members raised the point of the customer protection code and how it comes into play in the announcement and communications that we have right now. It is important to say that we would prepare for any of these types of announcements on a scenario basis so that we are ready to engage very quickly with customers to ensure that, in line with the code, we are acting very fairly and communicating very professionally and honestly, etc. The code specifies very clearly the sort of standards that the Central Bank would expect in our communications with customers. In preparing for any of a range of announcements, that clarity is extremely important, as is being very clear with customers from the get-go that, today and in the immediate future, there is no change in respect of the services we are providing to customers. If a person is, for example, under offer for a mortgage and about to sign off for a new home etc., then that product is still available to him or her. That continuity beyond the announcement is there for customers, which is of great importance. No action needs to be taken immediately on that.

Equally, on Friday we commenced a process of proactive outreach to vulnerable customers. This is something we have done quite a bit during the Covid-19 period and have become quite efficient at because of everything that has happened in recent months. We commenced that process because one of the things that always concerns us is frauds and scams. It is very important we have begun that outreach to customers because, with the best will in the world, when it comes to emailing or writing letters directly to a million customers, it takes about a week for that kind of activity to drop, which is really pushing it. Over the weekend we put some adverts in the broadsheet newspapers with that very clear customer message. The vulnerable customer outreach activity of is of great importance to the activity we have and will continue along that vein. When there is information, we will proactively engage with customers in the clearest way we can, especially paying extra attention to our vulnerable customers.

Ms Jane Howard

I wish to pick up on the question about customers who have what may be described as non-performing loans or who have financial difficulties. Our number one priority in supporting these customers is to help them get onto a sustainable solution. That has been and remains our priority. I have quoted in the past that, where we are able to engage with customers, then in four out of five cases we can find a solution that works for that customer, but it is very much an individual case because people's cases are very different. We want to and will continue with that because it is good for customers and for the bank. We are keen to do that, in particular because Covid-19 has caused challenges for almost everybody, but we have had to help customers with payment breaks. Fortunately, many of those customers have been able to return to paying but some have not. We very much want to continue what we are doing today, and to any customers who may be listening, I urge them to contact us. We look at each customer on an individual basis, we understand his or her circumstances, and we look for solutions that mean we will keep the customer in his or her home and with a solution that works for him or her. That is our priority and does not change. The fact this is a phased withdrawal over a number of years means we can continue to support in that way. That is the priority for our customers who find themselves in financial difficulty.

One of the other questions raised was about switching. I will touch on that briefly and one of my colleagues may want to add something to that. One of the things we are quite concerned about with mortgages is that we have had some low rates and still have some of the lower rates. We have communicated as clearly and as consistently as we could that there is no need for customers to take any action. There are no immediate changes, whether to the branch network or the fact we offer a full service and will continue to do that. Therefore, all contracts that are in place remain in place. We do have some of the lowest rates, and customers who are in the fortunate position that they can overpay on their mortgage can do so if they have a mortgage with us. We need to ensure customers do not move and potentially make a decision which means they will be worse off.

That is why we have been quite clear that there is no need for anybody to take any action. We will be communicating with customers. As, if and when we do sell the mortgage portfolio, customers are protected under the consumer protection code, which was touched on a moment ago in response to a question. So all protections will travel with customers on to a third party. As I said earlier, our preference is absolutely to work with banks that offer a full banking service here in Ireland. So there is no need for customers to take action. We have tried to make that as clear as we can. We want to make sure that customers realise that. As and when the decisions are made, all of their protections will travel with them.

There is also another aspect on the switcher, making it a phased withdrawal, and our discussions with Permanent TSB and others. One of the things that we are starting to turn our attention to is how we make switching as easy as possible. There are other countries such as the UK and the Netherlands, in particular, where they have a switching capability that is easier. So we started to look at that this week to understand what could be done in this country to make switching easier for customers. The message is that people do not need to take any action. It is business as usual, and we will be writing out to all of our customers - we have already started that - to support them as we go forward. I hope that answers the questions that we have in terms of the switcher.

On mortgages, I know there is a concern about customers who may be actually in the process, if I can use that phrase, who may have come to us for a mortgage and not yet completed it. As I have made it clear, it is business as usual. We continue to offer a full service, and we will be supporting our customers through that process until their mortgage completes. I think I have answered most of the customer questions. Have I missed anything?

Will Ms Howard comment on the Goldman Sachs issue, and on the ethical funds? I asked about the involvement of Goldman Sachs, the use of ethical funds instead of vulture funds, and the commercial tracker mortgages.

Ms Jane Howard

We tried to cover colleagues and customers, so now I will come to that question. In terms of the reviews that we have conducted, there is a strategic review and it is a continuous activity, not just in our banks but, I would imagine, in all industries when the pace of change is so fast. Goldman Sachs acted as an adviser to NatWest. I do not have much more detail than that on it. I do know that the strategic review considered a range of strategic options. Now that we have a decision, my purpose, as the CEO here, is absolutely on ensuring that we withdraw safely and in an orderly fashion, and help two core objectives. One is to help our customers to move to a new bank as safely and as seamlessly as possible. Two is to minimise job losses, and where we cannot, to support our colleagues with reskilling on an individual basis in terms of what is right for them. Goldman Sachs acts as adviser to NatWest to support it in the strategic review.

The decision was made because Ulster Bank is not able to generate long-term returns at an acceptable level, and I recognise that. That is not a new thing. It has been a challenge for us over recent years. One of the biggest factors is negative interest rates and low interest rates which make it a bigger challenge in terms of income. Also, on the costs side, we are competing with new entrants and it is important that we have things like a mobile app, the ability to purchase a home online, and other technological capabilities to compete with those dimensions. As I would see it, one of the bigger issues we face is the income challenge, which is not helped in an environment with very low and negative interest rates that looks like it is going to continue over the longer term. Would Mr. Stanley like to add a comment?

Mr. Paul Stanley

A number of Senators and Deputies asked about capital and risk weighted assets. The risk weighted assets levels required here in the domestic market, as has been pointed out, are certainly higher than the UK and, indeed, higher than most of the economies in Europe. It might be worthwhile looking at a report the Banking & Payments Federation Ireland, BPFI, issued last week. That, rather than me going through the details of it here, explains better how Ireland stands in that regard. The levels are quite in excess. In the UK, mortgages with risk weighted assets are sold in the mid-teens whereas here we are probably heading to near 40%, and that gives a flavour of the amount of capital in that. That acts on the levels of returns. Certainly, our shareholders can see the market here-----

I cannot hear the answers at the moment.

Mr. Paul Stanley

Apologies. Can the Deputy hear me now?

Yes. Will Mr. Stanley start from the start because I am interested in that topic?

Mr. Paul Stanley

Yes. Quite a number of Deputies and Senators raised the question of capital and risk weighted assets, and they are one in the same. The high level of risk weighted assets drives the amount of capital. It is not just Ulster Bank that is required to keep, but other banks in the domestic market as well. As one of the Deputies said, those levels are certainly higher than in the UK and, indeed, higher than many countries in Europe as well. That impacts obviously on a shareholder's return on capital. I pointed out that the BPFI issued a report last week, and a number of members will probably have seen it or been through it, that highlights the causes of the difference and shows the comparisons across Europe. I suggested to the Chairman that it is probably worth, through the BPFI, getting more in-depth feedback on the issues there and what is happening. It certainly is a feature of the levels of returns not just with Ulster Bank but indeed other Irish banks in the market here.

There was a reference to the dividend paid and it is probably worth clarifying this point. On the €3.5 billion of dividends that have been paid back to the shareholder, and the Deputy is quite correct about the level paid back, as I have described previously when I have been in front of the committee, those are not related really to the levels of profit that the bank is generating. A point was made by Ms Howard earlier that the levels of profit are very low. Again, one of the highlights from the previous committee meeting was that the 2% or 2.3% returns on equity and the levels of profit the bank is making did not drive those dividend payments. What drove those redistribution payments was the €15 billion of capital that came in from UK taxpayers into Ulster Bank to stabilise the bank during very difficult times. Helpfully, the amount of capital that was needed in that regard, as it has turned out, is probably less than was anticipated at the time. Those excess levels of capital are what will allow that distribution to take place, not the actual earnings of the bank itself. I have said this before when I have been in with the committee, so just to clarify that.

A number of members have indicated that they have further questions so, with the limited time left, I am going to go back to the members. I would say that the witnesses have not answered the questions on the ethical funds or the commercial trackers. Will they answer those questions, please? I call Senator Higgins.

Ms Howard assured people that they do not need to move and they will be notified. I know, however, that the list of FAQs that the bank is giving to customers says that they will be notified in advance if the mortgage book that contains them is being sold. How far in advance?

Rather than waiting for further decisions on their mortgages, a number of people would like to be able to plan their lives and make decisions themselves. What kind of notice can customers expect if there is a question of their mortgage being sold, in order that they can take steps to switch or make their own choice about where it should be transferred?

I asked for a specific assurance regarding non-performing loans. Some of the loans previously sold to CarVal had only a 12-month period of non-performance. Will a two, three or four year period be used for loans that might be categorised as non-performing? My concern is that 2020 or a 12-month period which includes the pandemic could be used to categorise either SME loans or mortgage loans as non-performing. Can the witnesses assure us that that will not be the case and that a wider timeframe will be applied when categorising loans as non-performing?

I will go back to some questions that were not answered. Does Ms Howard agree with the decision of NatWest to end Ulster Bank's presence in this State after 165 years? She had a big challenge when she came in, she knew the challenge and set about addressing it. She gave a timeframe of about four to five years and she was not given that. Did she support the decision? There were other options on the table.

I am very conscious that the words of Ms Howard and other extremely well-paid executives in Ulster Bank, as well as the press releases, are all about reassuring people. They refer to preferred options and so on. Has a direction been given by NatWest not to sell to vulture funds? Is there any discussion open with vulture funds at this point in time? If a vulture fund phoned Ulster Bank up tomorrow would the bank say it is not interested?

We have a memorandum of understanding with AIB. Did Ulster Bank make any assessment internally about the competition issues that may or may not arise, given the fact that AIB and Bank of Ireland will dominate more than 90% of the market between them? Permanent TSB does not have a memorandum of understanding. I am not looking for any commercially sensitive details, but when did engagement start with AIB and Permanent TSB? We need to build a third force in Irish banking. One of the big problems with Ulster Bank and Permanent TSB is their size and cost ratio, and the fact that they are competing with two larger entities. The capital issues we need to get a handle on are significant and the committee should ask the Central Bank and the ECB to give us a report on that. At what level did Ulster Bank begin engagement with Permanent TSB?

My final questions relate to the portfolio. I went through some figures earlier, on the size of the tracker mortgage book in particular. Have there been any expressions of interest in that? I am not asking the witnesses to disclose who the interests are at this point in time. Where do they see that going? Some would argue that the tracker mortgages are loss-making. They are not loss-making but I ask them to comment on that because there are many people out there with mortgages.

Ms Howard said nobody should panic, and I agree with that, but there are 1.1 million depositors within Ulster Bank. There is much talk of negative interest rates being applied. Ulster Bank applied negative interest rates last year and AIB and Bank of Ireland are applying negative interest rates on higher deposits of €1 million and above. There are now discussions about negative interest rates on smaller deposits, particularly given that €21 billion will need to find a home shortly. Can Ulster Bank give any reassurance to depositors that it is engaging with other lenders, in order that their deposits will not end up in negative interest accounts?

Ms Howard might just give a "Yes" or "No" answer to this. Did she or Ms Alison Rose look to meet the Governor of the Central Bank here in Ireland?

Ms Jane Howard

I meet the deputy governors regularly and I and Ms Rose met the regulators both here and in the ECB. I cannot remember the exact date but it was about a month ago. That is a normal course of meeting. I meet the deputy governors in the normal course of business on a regular basis.

Did she or Ms Rose request to meet the Governor of the Central Bank here in Ireland?

Ms Jane Howard

I have not made a request to meet the Governor. As I said, I would normally meet the deputy governors and I have done that.

This relates to the question I raised earlier, which was not answered. It was not answered on foot of Senator Davitt's question either. I am not necessarily interested in how many times Ms Howard met representatives of the Central Bank but I am interested in what she discussed with them when she met them. Did they discuss the strategic review since September? If so, what was the nature of those discussions? Did the Central Bank make any contact with Ulster Bank during that review? I ask her to talk us through what the relationship has been like.

We do not have the time. We have four minutes left.

Ms Howard and her colleagues might at least address the nature of the conversations with the Central Bank, when they started to discuss the strategic review and the possibility of Ulster Bank exiting the market.

This is a "Yes" or "No" question. Will Ms Howard give a commitment not to sell the bank or any portion of it to a vulture fund?

There are serious issues of a structural nature-----

Could the Deputy ask a question, please?

It is a question for the committee. Could we bring in the Minister for Finance and the Department with regard to structural problems that have been outlined in the Irish banking market?

I did not get any explanation as to what the orderly phased withdrawal means. How many phases are indicated and how long will those phases take? Every bank has what they call "valued customers" and I am sure Ulster Bank is no exception. What was offered to those valued customers when the proposal to withdraw from the market in Ireland came out? What offers, if any, were made to them? Were they just told they were going along with the rest of the package and that services would no longer be available to them?

Due to the Covid restrictions we are obliged to finish at 6 o'clock. Quite a number of questions have not been addressed and other questions were asked just now by Deputies and Senators. I ask that by the end of this week, the witnesses review the meeting and get back to us with those "Yes" or "No" answers and the more detailed answers that are required. We intend to follow up on this and the important thing is that the witnesses give a commitment to the committee that they are prepared to attend again as the various developments roll out. It is hugely important that we hear that directly from Ulster Bank and that the committee members' concerns are addressed.

Ms Jane Howard

We will come back with answers to the questions that were posed. Between us we probably caught most of them. We will absolutely come before the committee when invited to do so.

In the minute that is left, I ask again if Ms Howard agreed with the decision to withdraw from the market here in this State.

Ms Jane Howard

I recognise the reason for the decision. I have been here two and a half years but even before that the team here worked hard to improve the bank's position. We have made progress but Ulster Bank is not able to generate the returns at an acceptable level, for some of the reasons we have already discussed.

That is not the question. Did Ms Howard agree with the decision, or did she as CEO fight for her staff and customers?

Did she agree with the decision? She was part of the conversation.

Ms Jane Howard

I understand the reason for the decision. We are not able to generate sustainable returns over the long term. I understand that and recognised it.

As Ms Howard has heard time and again during the meeting, most members agree that this was an appalling decision that will have far-reaching consequences for the bank's customers and staff and the economy. Despite our best efforts in this House and through the Minister and the Minister of State, we have failed to get the type of conversation we wanted in the lead-up to the announcement. It is important that Ms Howard addresses the outstanding questions before next Friday. If there are difficult ones on which she needs more time, she might let us know. We will revert to her in due course in regard to the date for another meeting. I thank her for attending and I thank members for their presence and contribution.

The meeting is adjourned until 11 a.m. on Thursday, 25 February, when we will meet in private session.

The joint committee adjourned at 6.01 p.m. sine die.