Ulster Bank eyes job cuts as low rates squeeze income

Ulster Bank’s chief executive said there will be a fresh round of jobs cuts at the group as it seeks to rein in costs as ultra-low central bank interest rates squeeze lending margins.

"I think we all thought that by now we were going to be in a position where interest rates were rising, but, from the latest coming out of the ECB, it looks like it could be four years," Jane Howard told The Irish Times in her first profile interview since taking over the helm of the bank last September.

“It is going to be a challenge to generate new income. Therefore, the lever we’re going to have to pull is cost.”

Ms Howard said her executive team “will look across the whole organisation” to reduce expenses, as it works to simplify its processes and takes greater advantage of its parent’s technology. She declined to give a figure of how many jobs could be cut or a timeframe.

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Her comments indicate the cost savings are more far-reaching than when the bank said last month, as it reported a 75 per cent drop in first-half operating profits, that it planned to cut jobs in its 400-strong problem loans unit as the mortgage-arrears crisis eases.

Removing complexity

“I don’t want to take out cost if it impacts the customer proposition, because we need to protect income,” she said in the interview this week. “We will do it thoughtfully by removing complexity, then taking out cost.”

Ulster Bank, part of the Royal Bank of Scotland (RBS) group, moved in early 2009 to become the first retail bank in the State to cut jobs and branches at the start of the financial crisis. It has since eliminated more than 1,000 roles as the size of its balance sheet shrank by half, leaving it with an average of 2,368 staff and 247 temporary employees at the end of last year.

Ulster Bank has reduced its number of branches in the Republic from 190 before the crisis, including now-defunct First Active locations, to 88, currently. However, Ms Howard said that she does not expect to close more offices in 2019 or 2020 at least.

While analysts say that perennial merger speculation surrounding Ulster Bank over the past decade will only increase as the industry grapples with income pressures, Ms Howard said the bank has a deliverable plan to rebuild profitability to acceptable levels for RBS over the next three to four years. "I've not got a mandate to think about mergers and acquisitions," she said.