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Ulster Bank fined €2m after €300m shortfall found


Ulster Bank's Irish headquarters in Dublin

Ulster Bank's Irish headquarters in Dublin

Ulster Bank's Irish headquarters in Dublin

ULSTER Bank has been fined almost €2m for failing to keeping enough money in reserve to meet banking regulations.

The Central Bank said the €1.96m penalty reflects the importance it places on compliance with rules for credit institutions after Ulster was found to be more than €300m short.

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.

"Failing to meet these basic requirements represents an unacceptable risk to a regulated financial service provider's business and to the Central Bank achieving its statutory objectives."

Ulster Bank was found to have had a shortfall of €313m in its safeguards against risk in a regulatory return filed on March 31 last year.

Parent company Royal Bank of Scotland immediately made a cash injection when the mistake was revealed.

It is the first settlement by the Central Bank with a firm for contraventions of capital requirements and the third for contraventions of liquidity requirements.

The Central Bank said the primary cause of the failures was due to inaccurate capital forecasting and other capital management control issues.

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.

It said no customers were affected.

Chief executive Jim Brown said: "This settlement is significant and we acknowledge that these contraventions, which occurred in 2011, were unacceptable.

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

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

Ulster Bank was thrown into chaos earlier this year after a systems failure left many of its 1.9 million customers unable to see or use cash paid into their accounts.

It was initially estimated that the IT meltdown would cost the bank €35m but that forecast was later upgraded to twice that.

Mr Brown has waived his bonus for this year.

PA Media