Ulster Bank has decided to sell its fund management arm, Ulster Bank Investment Managers. UBIM, which is one of the Republic's leading investment management groups, is estimated to be worth £90 million (€114 million), but could be sold for considerably more, depending on the level of interest.
UBIM manages more than €7 billion of assets for pension funds, charities and private investors and has established a strong track record in terms of the level of returns it achieves for its customers. The subsidiary is expected to attract a lot of interest from the major Irish financial institutions, with Bank of Ireland, AIB and Irish Life & Permanent likely to be among the bidders while the bank is hoping also to attract considerable international interest. The sale is coming as NatWest is itself seeking to sell the entire Ulster Bank group, as part of its defence against hostile bidders.
The decision to sell the investment arm may reflect strong interest in this part of the business from companies which have lodged indicative bids for Ulster Bank. However, Ulster Bank management favours floating the group and says the sale results from a review process initiating as part of the float preparations, which are being undertaken in parallel with the sale process. Most market analysts believe that a sale is more likely, provided a bidders come up with a strong offer.
Ulster Bank is also preparing to sell its custody and fund administration operations which are based at Dublin's International Financial Services Centre.
In a statement, the bank said it was considering several options for Ulster Bank Investment Services that could include an alliance with a strategic partner and/ or a trade sale. The bank would consider selling UBIM and UBIS separately or to the same bidder.
Ulster Bank group chief executive, Mr Martin Wilson, said the divestments were in line with the bank's desire to focus on retail and corporate banking. "Going forward, Ulster Bank will be a tightly focused financial services organisation with a clearly defined business proposition. We intend to significantly develop our franchise in our chosen market sectors," he said yesterday.
UBIM's chief executive, Mr Gavin Caldwell, said the businesses would be sold as a going concern. Together the two operations employ 175 people. Mr Caldwell said UBIM's senior management would have an input into the sale process.
The decision to sell off the two subsidiaries was reached jointly by Ulster Bank and its parent, NatWest and the sale is being handled by NCB Corporate Finance. An information memorandum has been prepared for bidders and will be circulated shortly.
Ulster Bank will retain UBIM's personal investment department, which develops personal investment products for its branch network and manages private client investment portfolios. The decision to sell UBIM comes at a time when NatWest is considering a range of bids for its entire Irish operations. Up to 10 financial institutions are believed to have made bids of around £2 billion for Ulster Bank's operations to NatWest's corporate advisers, Dresdner Kleinwort Benson in London. These include AIB and a joint bid from Bank of Ireland and Irish Life & Permanent.
Industry sources suggest the decision to sell UBIM was prompted by the strong interest expressed by the various bidders in that aspect of its operations.
Mr Paddy McMahon, chief executive Ulster Bank Capital Markets, said the bank had decided it was a good time to sell its fund management arm. The continuing uncertainty about the future ownership of Ulster Bank had also proved unsettling for its clients, he said.
NatWest is planning to sell Ulster Bank as part of its efforts to raise funds to fend off hostile bids from the Bank of Scotland and the Royal Bank of Scotland. It insists that the divestment of Ulster Bank will be done in a manner that maximises the value for its shareholders and could include a trade sale or the flotation of the.
Analysts have largely dismissed the flotation option, given its relatively small size and the high concentration of financial stocks on the Irish market.
The decision to sell UBIM follows a review of Ulster Bank's entire operations. UBIM was established in 1980. At the end of last June it was estimated to have 11.5 per cent of the Irish pensions fund market and 18.4 per cent of the segregated pension fund market.
