ROYAL Bank of Scotland chief Stephen Hester yesterday claimed he'd received "strong assurances" from the Irish Government that the new personal insolvency regime won't be "unduly anti-business".
The comments came as the banking boss admitted that setting Ulster Bank's mortgage provisions was like "sticking a finger in the air" because the market is so abnormal.
Mr Hester was speaking to analysts after Ulster set aside another £215m (€265m) for mortgage losses in the first quarter of the year, down marginally on the first quarter of 2011 but up on the £133m for the last three months of 2011.
The bank repossessed 46 properties over the quarter, up from 37 in the first three months of 2011, with half of the repossessions described as voluntary surrender or abandonment.
Several banks have reacted with concern to the Government's plans for a new insolvency regime that could allow people to have parts of their mortgage debt written off.
Banks and their lobby groups have made several representations to the Government on the issue and a draft of the new legislation has been delayed until June.
Mr Hester told analysts he had travelled to Ireland last week and had "a number of contacts with the Government".
"(I) received pretty strong assurances that the regime that is due to go through parliament in the next three or four months will not be an unduly anti-business regime," he said.
"At the moment, it feels like the legislative process is not going to lead to a chaotic situation for banks, although there's some uncertainty for banks until it's complete."
A Department of Finance spokesman confirmed Mr Noonan met Mr Hester last week. A spokeswoman for the Department of Justice said Justice Minister Alan Shatter had not met Mr Hester.
"In drafting the legislation, we were conscious of the need to achieve a fair balance between the interests and rights of debtors and creditors," a spokesman for the Department of Finance said.
He stressed that the Department of Justice was "sponsoring" the legislation.
Ulster's mortgage book has 12.4pc impaired loans "or loans where an impairment event has taken place", up from 10.9pc at the end of 2011. The bank has booked actual losses of 47pc of those loans.
"Frankly, I completely accept it's a little bit like sticking a finger in the air and our attempt to keep our provisions broadly in the pack of other banks," Mr Hester told analysts yesterday.
He added that he thinks it's "more likely than not" that Ulster's provisions will start coming down this year since the new Government "seems to be doing the right things, the economy seems to be flat as opposed to going down and exports are still positive".
Ulster's total loan loss provisions from mortgages, corporate and "other lending" fell by £67m, helping the bank shrink its operating loss by £55m to £310m.
Deposits fell 8pc on a constant currency basis as a 2pc rise in deposits from SMEs and retail customers was "more than offset by lower wholesale balances", while loans fell 4pc reflecting regular repayments and "ongoing weak demand for credit".
Losses on Ulster's 'non-core' loans -- largely commercial property and investment -- slowed markedly in the first quarter of the year, coming in at £264m against £839m a year earlier. The slowdown reflects the multi-billion pound provisions RBS has already taken on this £13.8bn loan book.