Ulster Bank fined €2m over capital breaches

http://www.guardian.co.uk/business/2012/nov/19/ulster-bank-fined-capital-breaches

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Ulster Bank, the Irish division of Royal Bank of Scotland, has been fined €2m (£1.6m) by Irish regulators for breaching rules on the amount of capital it should hold to protect it against collapse.

The Central Bank of Ireland, which regulates banks, said the offences occurred between January and September 2011 when the bank did not comply with rules relating to liquidity – the amount of cash it holds – and also at the end of March 2011 when it made two contraventions on rules covering the amount of capital it should hold.

The bank had reported a capital shortfall of €313m on 31 March last year when RBS, more than 80% owned by the taxpayer, plugged the gap.

Peter Oakes, director of enforcement at the Central Bank of Ireland, said this was the first settlement relating to capital breaches and only the third relating to breaches of liquidity rules.

"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," Oakes said.

Ulster Bank stressed it had alerted its regulator to the problems and that customers had not been affected. Jim Brown, chief executive of Ulster Bank, said: "This settlement is significant and we acknowledge that these contraventions, which occurred in 2011, were unacceptable."