Belfast Telegraph

Ulster Bank admits its mistakes over breach

By David Elliott

Ulster Bank's failure to keep enough money in its reserves to meet banking regulations last year was unacceptable, according to the bank's chief executive Jim Brown.

He said the record £1.6m fine imposed on the lender by the Irish Central Bank is "significant" but that a repeat of the breach is unlikely and he reiterated that customers weren't at risk.

"We identified the contraventions ourselves and we have since implemented a number of robust measures to ensure similar contraventions are not repeated," he said.

"I would like to highlight that, at no point during the period in question, were our customers affected in any way."

Despite Mr Brown's assurances, the central bank showed little mercy with Ulster Bank despite the fact parent company RBS immediately stepped in to shore up reserves when the breach was discovered in March 2011.

The Irish Central Bank is charged with monitoring banks operating in Ireland to ensure they hold large enough cash reserves to deal with a crisis and still pay out to customers.

The level of capital banks are forced to hold has been increased considerably since the credit crunch when a lack of cash reserves was said to be one of the reasons for the downfall of banks across the world.

In this case, Ulster Bank failed to apply haircuts, or discounts, to some of its deposits and therefore ended up mis-reporting how much capital it was holding by around £250m.

Ulster Bank was found to have contravened regulations in five areas - three on liquidity and two on capital requirements.

Ulster Bank said it had spotted the failures and notified the Central Bank.

Peter Oakes, director of enforcement at the Central Bank, said failure to meet requirements is an unacceptable risk.

"This enforcement action and the penalties imposed reflect the importance the Central Bank places on compliance with all aspects of key prudential requirements," he said.

"Regulated firms must fully comply with their liquidity and capital requirements including, establishing and maintaining effective internal controls for the management of liquidity risk and having in place sound and effective strategies and processes to address internal control requirements."

Factfile

The Irish Central Bank is charged with monitoring banks operating in the Republic to ensure they hold large enough cash reserves to deal with a crisis and still pay out to customers. The level of capital banks are forced to hold has been increased considerably since the credit crunch when a lack of cash reserves was said to be one of the reasons for the downfall of banks across the world. In this case, Ulster Bank failed to apply haircuts, or discounts, to some of its deposits and therefore ended up mis-reporting how much capital it was holding by around £250m.

Popular

From Belfast Telegraph