The Tánaiste and Minister for Enterprise, Trade and Employment said that the decision by Ulster Bank to withdraw from the Irish market is "unwelcome news".

Leo Varadkar said the Government is trying to mitigate against any harm to business and ensure there is engagement with staff representatives going forward.

He said the Government has been in ongoing discussions for some weeks with NatWest.

The Tánaiste also stressed that deposits and savings are fully protected and two months' notice is required before any transfer of Ulster Bank customer funds to other banks.

Mr Varadkar said the terms of loans and mortgages cannot be changed if the customer is meeting the conditions "no matter what happens to Ulster Bank" and all consumer protections under EU laws ensure that is the case.

He said that a third of all lending to small businesses at the moment are Government-backed in some way.

While the withdrawal of Ulster Bank is not a good development for competition, Mr Varadkar said there is "a potential there for a stronger or bigger Permanent TSB that might help to provide competition" to emerge from the discussions taking place.

He said the truth is that foreign banks and new banks do not want to set up in Ireland at the moment as they have to hold a lot of capital reserves to do so.

The Tánaiste said any bank opening in Ireland cannot offer the same rates for loans or mortgages as in some other EU countries, due to legacy issues from the 2018 financial crisis and because a lot of loans in Ireland go unpaid.

Mr Varadkar also said that an unintended advantage of banks holding those capital reserves may emerge now as many people - through no fault of their own - will be unable to repay loans as a result of the pandemic.

The sale of Ulster Bank's mortgage book to an outside fund cannot be prevented, the Tánaiste said.

But he added that the Government has been very clear it wants and expects NatWest to engage with traditional banks like AIB, Bank of Ireland and Permanent TSB.

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Meanwhile, the Minister for Finance said today is a difficult day from an Irish banking perspective and also for the Ulster Bank staff who are receiving news of the bank's exit from the Irish market.

Paschal Donohoe said he had spoken to the chairman of NatWest early this morning and had engaged with the Governor of the Central Bank.

He said he plans to talk to Ulster Bank chief executive Jane Howard and to the financial services union to address their concerns.

"The decision by NatWest, the parent of Ulster Bank, to exit the Irish market is a very significant event. After 160 years serving the Irish public, today marks a sad day," Mr Donohoe said.

"Our thoughts too are with the Ulster Bank staff as they learn of the closure of the bank here in Ireland," the Minister added.

He said that while news of the talks with both AIB and Permanent TSB is positive news and indicates the potential further development of already well established Irish banks, there is still much work to be done over the coming months.

The minister also reassured Ulster Bank customers that "robust" consumer protections are in place in the event of the bank withdrawing from the Irish market.

These include the Central Bank's codes of conduct and that the terms of any contract currently in place with Ulster Bank remains in place into the future.

"I also welcome the announcement regarding Ulster Bank staff which outlines that some staff will transfer to AIB in line with the MoU that has been agreed with that bank," Mr Donohoe said.

"The commitment to engage with staff to minimise the impact on them is also to be welcomed - I expect that Ulster Bank will fully engage with staff in an open and transparent manner as the process moves forward," he added.

The Finance Minister said the Irish banking landscape will be poorer for the loss of Ulster Bank after all these years.

"But we will focus now on the future and what can be done to support and strengthen a competitive and stable Irish banking system for the future," he added.

He also said it must be remembered that neither the Government nor he have any role in commercial decisions such as these and that any decision of this nature is a matter for the banks and their boards, who remain independent.

Meanwhile, the Irish Banking Culture Board said news of Ulster Bank's phased exit from Ireland comes as "a significant and disappointing development for the Irish banking market".

In a statement, the Irish Banking Culture Board said it recognised that it is an extremely difficult day for the staff and customers of Ulster Bank, which is a valued member of the Irish Banking Culture Board.

"It is crucial that this process is managed in an open and transparent manner and that staff and customers are treated with fairness and respect throughout, applying the principles of good culture at this time is critical," the statement added.

FSU calls for certainty for Ulster Bank staff

The Financial Services Union said it had what it described as a 'constructive' meeting with the Minister for Finance to discuss Ulster Bank's exit from the Irish market.

John O'Connell, General Secretary of the FSU, said job certainty for staff, the option for staff to transfer with their work, the terms and conditions of staff, and the retention of the branch structure were among the issues discussed with Paschal Donohoe.

"I welcome the meeting today and the Minister's commitment to continued dialogue with the FSU. I would contrast that directly with the silence over the last six months from NatWest," Mr O'Connell said.

The union called for a moratorium on branch closures for the rest of this year "to give reassurance to customers that this vital community link is not broken, particularly in the middle of a pandemic."

Mr O'Connell told Morning Ireland earlier that 2,800 jobs in the Republic and 600 jobs in Belfast are affected by the Ulster Bank decision to withdraw from the market.

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Mr O'Connell said that staff have been treated "shabbily" and they need certainty and reassurance that when work transfers "the jobs will go with it".

He said the union is studying the details this morning but added that "it is clear there is a little bit of time to get this right".

Mr O'Connelladded that consumers are well protected in this state and all focus needs to be on ensuring the maximum amount of jobs transfer as set out under law as part of any transformation of the business.

Labour calls for 'third force' bank

Labour's finance spokesman Ged Nash said today's "devastating news" is a hammer blow for the 2,800 Ulster Bank staff, for their customers and for businesses across Ireland.

Ged Nash said that any sale or potential merger must respect the right of staff to have their existing terms and conditions transferred with them and compulsory redundancies should be off the table.

He urged the Government to use its majority stake in Permanent TSB to create a new bank with the Ulster Bank assets.

He said that Labour believes this "third force" bank would ensure competition in an Irish market already dominated by the two main players, Bank of Ireland and AIB.

"What we need to avoid is the piecemeal dismantling of the bank and its operations by vulture funds and other Irish banks which will damage any effort to create a real third force," Mr Nash said.

"It is incumbent on the Government and the Minister for Finance to drive such an outcome rather than acting as commentators," he added.

Withdrawal of Ulster Bank a 'hammer blow' - Sinn Féin

Sinn Féin's finance spokesperson Pearse Doherty has described the decision to withdraw Ulster Bank from the Republic of Ireland as a "hammer blow" to the workers and also to the banking sector.

Speaking on RTÉ's Morning Ireland, he said there is a need now to make the best efforts to ensure people and jobs are protected, and that the banking sector has competition.

He said there is a clear role for the Minister for Finance to ensure there are "maximum protections" in place and try create a third force in Irish banking, which he said is about "beefing up Permanent TSB to compete with AIB and Bank of Ireland."

He said it is disappointing that Permanent TSB has not been looking at the commercial loan book of Ulster Bank.

"Because if that falls into the hands of AIB and while that will give protection to customers and for staff, which is very, very welcome, what we have in terms of banking in the State is just two lenders in terms of business lending and that is not good."

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He said there is a need to increase competition and he said the regulator pointed out to him last year that this removal of Ulster Bank is likely to put pressure on interest rates, which will affect everyone.

Mr Doherty said the finance minister has a clear role as a majority shareholder in these banks "to give a clear indication where he sees these banks going into the future."

He believes all of the banks should be engaged now with Ulster Bank.

Mr Doherty also said it is crucial that the Ulster Bank mortgage book is not sold to vulture funds.

He said it is really important that people do not rush to make a decision as they could lose preferential treatment.

Ulster Bank customers 'should not panic'

Minister for Public Expenditure and Reform Michael McGrath described Ulster Bank's decision as "a serious blow" for staff, customers and the wider banking sector - however he also said customers should not panic.

Mr McGrath said people should not make decisions on what to do with their accounts until they had taken advice and considered their options.

"While Ulster Bank's withdrawal is going to be gradual and phased, this is nonetheless a deeply disappointing decision by the NatWest group which will have significant consequences given the size of Ulster Bank's presence in the Irish banking market," he said.

"The immediate priorities now are to ensure the staff are treated fairly and that the interests of their customers are protected.

"I welcome the fact that other Irish banks are seriously examining the possibility of purchasing loan portfolios and other products from Ulster Bank. It is encouraging that the emphasis is being placed on engaging with institutions who can provide customers with full banking services in the Irish market."

He added that Ulster Bank customers with tracker mortgage should be particularly careful when considering moving to another bank, as this could impact the terms they are entitled to.

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