BELFAST BRIEFING:AFTER MONTHS of waiting by the door for a suitor to call, First Trust is officially off the market. It's not because its parent, Allied Irish Banks (AIB), has had second thoughts about parting with its offspring and the 1,300 people it employs in Northern Ireland but because AIB failed to attract any sound offers for First Trust as part of a marriage of convenience with its other UK businesses.

AIB put its UK operations up for sale in March as part of its efforts to raise €7.4 billion. Although, initially, there was a degree of interest in some of its UK business, a stipulation that any deal would have to include First Trust quickly dampened potential suitors’ interest.

First Trust, which reported pretax losses of £52 million for the first half of this year, is one of the North’s big four when it comes to banks. Together with Northern Bank, Bank of Ireland and Ulster Bank, it dominates the local banking scene.

Although a host of other players, such as Spain’s Santander, have a significant presence in the North, the “big four” continue to command the market. AIB’s decision to sell First Trust created shockwaves because it historically enjoys around a 20 per cent market share.

At first glance, it is hard to see why any financial institution would want to walk away from that. But behind the glossy front of its 48 branches, First Trust has some significant issues that could deter even the most ardent admirer.

Ciarán Callaghan, an equity analyst with NCB Stockbrokers, was never convinced that AIB could successfully offload First Trust. A number of factors, not least the current economic climate, had stacked the odds against a sale, he said.

One of the key issues from a buyer’s perspective is AIB’s UK asset quality, especially in Northern Ireland. Callaghan says the division’s loan-to-deposit ratio of 172 per cent is very high, suggesting structural issues which need to be addressed.

That was not, however, what senior executives from AIB’s UK division were keen to dwell on when they were in Belfast last week to brief Northern Ireland staff on the way forward for First Trust. Their message was that the sale process was now under review and that the bank would be retained as part of the UK operations but subject to both a restructuring process and a rebranding in an attempt to reposition First Trust both locally and in the wider market.

AIB executives are expected to unveil their proposals for First Trust’s immediate future before the end of the month. It is no secret in Belfast that the bank has suffered as a result of the continuing uncertainty over its long-term future. It has lost customers and business to rivals, particularly Northern and Bank of Ireland.

Employees have also been extremely worried about their own future. Larry Broderick, general secretary of the Irish Bank Officials’ Association (IBOA), said fears over potential job losses remain valid.

He said neither the union nor staff had been informed officially of AIB’s decision to withdraw First Trust from sale.

“Staff in First Trust Bank and AIB (GB) are entitled to feel somewhat confused in the present situation” he said. “The decision to sell First Trust was short-sighted and damaging. We believe that First Trust has an important role to play in Northern Ireland. It is a sound, stable business.”

Mr Broderick is also calling on the Irish Government, which will own most of AIB, “to reinvest in First Trust to help create and sustain jobs and encourage competition in the market”.

He is concerned that any restructuring of First Trust will ultimately result in redundancies. Mr Broderick accepts changes are necessary but he believes this should not necessarily mean job losses in the North.