Ulster Bank starts repatriating excess cash to UK with €800m dividend

Ulster Bank paid an €800 million dividend to its UK parent, NatWest Group, on Friday, beginning the process of repatriating excess capital on its balance sheet as it hastens its exit from the Republic.

NatWest said in a statement that Ulster Bank will still have regulatory capital reserves – known as common equity Tier 1 capital – of more than 30 per cent of its risk-weighted assets following the transfer, significantly above regulatory requirements and more than double the level targeted by most Irish banks.

It comes as Ulster Bank has either sold – or agreed to sell – most of its original €20 billion of loans to Permanent TSB and AIB.

Ulster Bank laid the groundwork earlier this year for capital repatriation when it passed shareholder resolutions, following procedures allowed under Irish company law, that have created “profits available for distribution” of €4.24 billion, filings with the Companies Registration Office (CRO) show. This represents the so-called share capital and share premium on its balance sheet as of the end of last year.

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However, the amount that will ultimately move back to the UK will need to take in accumulated losses built up by Ulster Bank as it continues to run down its business. Retained losses at the end of last year stood at €1.59 billion, resulting in total shareholder funds of €2.63 billion.

Ulster Bank paid €3.5 billion of dividends to its parent in 2016-2019, representing just a fifth of the £15 billion (€17.5 billion) bailout the unit received during the financial crisis. Ulster Bank’s rescue bill equated to a third of the total UK government’s £45 billion 2008 bailout of NatWest, when the group was known as Royal Bank of Scotland.