Monday 22 January 2018

Ulster Bank lost €4bn in deposits after the guarantee

Former Ulster Bank executives Robert Gallagher and Michael Torpey at the Oireachtas Banking Inquiry in Leinster House yesterday. Photo: Tom Burke
Former Ulster Bank executives Robert Gallagher and Michael Torpey at the Oireachtas Banking Inquiry in Leinster House yesterday. Photo: Tom Burke

Clodagh Sheehy

Ulster Bank lost €4bn in deposits within weeks of the bank guarantee as its customers were targeted by other Irish banks.

The loss amounted to 20pc of Ulster Bank's total deposits, the Banking Inquiry has been told.

Former executive at Ulster Bank Robert Gallagher explained that €4bn had flowed out of the bank in the weeks after the bank guarantee .

He said there was "no doubt in my mind" that staff at the banks covered by the guarantee were "proactive with our customer base" at the time.

Mr Gallagher said Ulster Bank's board and representatives of the parent company, Royal Bank of Scotland, proactively sought to have Ulster Bank included in the guarantee but this had not happened.

Ulster Bank then required and received assurances and continued support from RBS, which ultimately cut back the outflow of deposits.

Mr Gallagher also told Pearse Doherty that Ulster Bank had needed a €15bn bailout from its parent company in the wake of the banking crisis.

Former chief economist with Ulster Bank Pat McArdle said the Financial Regulator should take the greatest blame for the banking crisis. Mr McArdle said he disagreed with Central Bank Governor Patrick Honohan that the biggest responsibility lay with directors and senior managements of the banks.

"In my view the Regulator had a higher degree of responsibility. The Regulator was the only one with full information on large exposures" and "critically the only institution that could have sought to curb excessive balance sheet growth".

Mr McArdle insisted that only the Regulator had the capacity to do something "and the alarm bells should have been ringing in Dame Street for the best part of a decade".


All of the banks had chosen to "stay with the herd and go over the cliff together" and "all this indicates that failures of supervision were at the heart of the financial crisis".

Earlier Mr Gallagher agreed with a suggestion by Deputy Joe Higgins that his remuneration in the years running up to the banking crash was "excessive".

Mr Gallagher's basic salary was €370,000 in 2005 and €470,000 in 2006 along with bonuses which rose from €99,000 in 2005 to €580,000 in 2008.

Questioned by Deputy John Paul Phelan about the introduction of 100pc mortgages, Michael Torpey, a former finance director at Ulster Bank, agreed this was "not a good move" by the lender.

He denied, however, that his bank was responsible for bringing this product to the market.

Mr Torpey said it had been available in a number of institutions at the time "on a case by case basis" before it became publicly available.

He added it "didn't move the dial in any dramatic fashion but it was not a good move to make with the benefit of hindsight".

Neither Mr Torpey nor Mr Gallagher would be drawn on the bank's loan to property developer Sean Dunne for the Jury's / Berkeley Court site in Dublin in 2005.

Mr Torpey said as financial director he had no part to play in these matters and would have no knowledge of individual customers, their loan applications or the credit decisions which would come before a credit committee. Mr Gallagher said at the time of sale and purchase of that asset he was not with Ulster Bank.

Irish Independent

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