The state-backed Royal Bank of Scotland has reportedly appointed Morgan Stanley to advise it on a potential merger for its Irish retail arm, Ulster Bank.
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Ulster Bank chief executive Jim Brown was quoted as saying that RBS is carrying out an "operating model review" to consider its options for the business in the Republic of Ireland.
"We think there may be further consolidation in the market. We’re looking to see if Ulster Bank can play a part in that. Clearly though, that would have to result in us getting a better outcome than our current organic growth strategy," said Brown.
According to the Irish Times, Brown went on to say that RBS and Ulster Bank were interested in the Irish finance minister’s plan to create a third large bank to rival the dominant Bank of Ireland and Allied Irish Bank.
He said: "They are looking for a third banking force in the market. I would assume whether it’s organic or through some other option that Ulster Bank would be one of those three. The Government is aware that we are looking at other options."
Reports in the Irish media speculated that Permanent TSB and KBC Bank Ireland would be the most obvious targets for a merger but Brown declined to comment on potential mergers with either bank.
He said: "There’s a lot of work to be done to see if this viable or not."
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