The Central Bank has fined Ulster Bank just under €2 million over violations relating to the management of liquidity risk and capital adequacy.

The central bank said in a statement that Ulster Bank had failed to apply the correct haircuts to four categories of retail and corporate deposits and had failed to maintain effective internal controls for the management of liquidity risk.

It said the bank failed to notify the Central Bank immediately of the contraventions, which took place between January 26th and September 13th, 2011.

The Central Bank said the penalty reflects the importance it places on compliance with prudential requirements for credit institutions. The fines totalled €1.96 million.

Director of enforcement at the Central Bank Peter Oakes said failure to meet requirements was 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.

In a statement, Ulster Bank confirmed that it had a settlement meeting with the Central Bank last week to discuss contraventions which related to liquidity requirements and capital requirements in 2011.

The bank said the contraventions were identified by Ulster Bank through an internal processes and brought to the attention of the Central Bank.

Ulster Bank said no customers were impacted by the breaches and it had reached a settlement with the Central Bank.

"We are acutely conscious of our obligations to comply with financial and regulatory requirements. We remain committed to ensuring that all appropriate procedures and controls are in place, to ensure compliance," Ulster Bank added.

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. We remain committed to serving the needs of our 1.9 million customers across the island of Ireland,” Mr Brown said.

Additional reporting Reuters