Ulster Bank seeks regulation from UK

ULSTER BANK is in talks with the Central Bank and the Government about switching the regulation of its business in the Republic from Dublin to London.

The move, if it goes ahead, is understood to be motivated by new European Union bank solvency regulations, due to come into effect next year, which will oblige the funding of Ulster Bank by its British parent Royal Bank of Scotland (RBS) to be capital-backed.

The Ulster Bank group operates two separate companies in Ireland: Ulster Bank Limited, representing its business in Northern Ireland, and Ulster Bank Ireland Limited, registered in the Republic.

The bank is considering making its operations in the Republic a branch of Ulster Bank Limited, rather than a standalone subsidiary.

In that event, it would be regulated here only for “conduct of business”, in common with other foreign-owned banks that operate in Ireland on a branch basis.

This means it would have to follow the Central Bank’s consumer protection regulations, but the ultimate responsibility for the solvency of the operation would transfer to the British authorities.

Sources close to Ulster Bank indicated that the desired switch in regulation from the Central Bank of Ireland to the Bank of England and the UK’s Financial Services Authority was not a reflection of the bank’s commitment to doing business in the Republic.

The move, which will require approval by the Central Bank and the Government, as well as the FSA, would simplify RBS’s regulatory status and give it better access to group funding.