Ulster Bank has announced its withdrawal from the Republic of Ireland.

The NatWest-owned bank said today that it would gradually close its business in the Republic over a number of years but will continue to operate in Northern Ireland.

It has a loan book of more than €20bn euro, mostly domestic mortgages, which will be sold or managed by a loan service company on behalf of NatWest.

The bank has 1.1 million customers in the Republic, with 2,800 staff in 88 branches.

It first announced its plans to close its ROI operation last year and has agreed a non-binding Memorandum of Understanding with Allied Irish Bank for the sale of a €4bn portfolio of commercial loans.

Ulster Bank says staff working on these loans will also transfer to AIB.

It is also said to be in talks with PTSB to take on its customers.

Ulster Bank was founded in Belfast in 1836 and opened its first branch in Dublin in 1862.

Minister for Finance Paschal Donohoe TD said the decision by NatWest to exit the Irish market is a very significant event.

“After 160 years serving the Irish public, today marks a sad day,” he said. “Our thoughts too are with the Ulster Bank staff as they learn of the closure of the bank here in Ireland’.

“However, I welcome the reference made this morning to the two other Irish banks, PTSB and AIB, who are engaging with NatWest regarding the future of Ulster Bank’s SME, mortgage, retail and commercial loan books, as well as the current and deposit accounts held by the Bank.

“While this 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’.