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article imageRBS draws up rescue plan for Ulster Bank: report

    Mar 2, 2014 in Business

LONDON (Reuters) - Royal Bank of Scotland <RBS.L> is working on a plan to salvage its troubled Irish business, Ulster Bank, by merging it with a number of rivals, the Sunday Times newspaper reported.

Attempts to find a buyer for the business have failed and a team inside RBS is looking at tie-ups between Ulster and other lenders, such as Permanent TSB or the Irish subsidiaries of Danske Bank <DANSKE.CO> or KBC, the newspaper reported.

Bolting the institutions together could allow the new Ulster Bank to strip out costs and mount a credible challenge to Ireland's top players, it said.

Ireland's finance minister Michael Noonan said on Saturday he would like a "significant" new bank with a big balance sheet to enter its lending market this year to drive competition in the diminished sector.

Ulster Bank has racked up losses of 2.5 billion pounds ($4.2 billion) over the past two years. It accounts for less than 4 percent of RBS's assets but was responsible for 20 percent of its bad debt charges last year.

The Sunday Times said RBS is in talks with a handful of private equity firms about providing tens of millions of pounds in backing for the venture.

RBS declined to comment.

($1 = 0.5967 British pounds)

(Reporting by Matt Scuffham; Editing by Catherine Evans)

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