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NatWest Group sank into a loss last year after setting aside billions of pounds to cover loans that could turn sour amid the pandemic.

The bank - formerly the Royal Bank of Scotland and still 62% taxpayer-owned - posted a pre-tax loss of £351m and set aside £3.2bn for bad loans.

However, the bank will resume making dividend payments to shareholders.

Separately, it announced that it would close down its Ulster Bank business in the Republic of Ireland.

Ulster Bank is by some measures the third largest bank in the Republic of Ireland but has struggled to be profitable.

"Following an extensive review and despite the progress that has been made, it has become clear Ulster Bank will not be able to generate sustainable long-term returns for our shareholders," said NatWest chief executive Alison Rose.

Allied Irish Banks will buy some of its commercial loans and hire some staff and Permanent TBS is in talks with Natwest for other parts of the business.

Irish finance minister Paschal Donohoe said: "After 160 years serving the Irish public, today marks a sad day. Our thoughts too are with the Ulster Bank staff as they learn of the closure of the bank here in Ireland."

Despite setting aside billions for potentially bad loans, NatWest said actual losses could be lower than the amount it has accounted for.

However, Ms Rose sounded a warning that she could not be certain about the "long-term impact of the pandemic".

The bank will also bring back its dividend, paying £364m a year.

Banks were told by the Bank of England to halt payouts to shareholders during the pandemic so that they could withstand loan losses. However, in December, regulators said banks could resume the payments.

The bank is able to pay dividends because of its healthy cushion of capital - the amount by which its assets exceed its liabilities - despite today's losses.

That capital position was helped by trimming the size of its investment bank over the course of the year.

The UK government's stake in the bank means the Treasury will get £225m.

After tax and payments to certain bondholders, the net loss for the bank is £753m.

On Thursday, rival lender Barclays reported a 30% fall in pre-tax profits to £3.1bn for 2020 after it made provisions of £4.8bn for bad loans.

Profits from its investment bank saved it from the loss NatWest reported.