ROYAL BANK of Scotland (RBS) and Lloyds Banking Group have injected €3.3 billion into their Irish divisions during the past 10 months amid rising property losses.
Records in Dublin’s Companies Registration Office show the two banks made a series of six payments, with the first in December and the most recent in August.
RBS injected about €1.58 billion into Ulster Bank, while Lloyds put €1.45 billion into Bank of Scotland Ireland.
“The scale of that figure is quite shocking,” said Brian Lucey, associate professor of finance at Trinity College Dublin.
“They weren’t leaders in the Irish market. The figure just shows the level of clean-up needed.”
British banks invested in Irish real estate developers at the height of the property boom and are now writing down investments amid the worst property slump in western Europe.
RBS, which is 70 per cent controlled by the British government, and Lloyds, which is 43 per cent taxpayer-owned, were bailed out by chancellor of the exchequer Alistair Darling with £37 billion of public money 12 months ago.
The Irish bailout’s cost in sterling is £2.8 billion.
RBS spokeswoman Fiona McRae would not comment on whether the bank planned to send further aid to its Irish unit.
Asked the same question, a Lloyds spokeswoman said it continued to provide capital and funding support “as we would do in the normal course of business and on an ongoing basis”.
Irish impaired assets deteriorated following the “collapse in liquidity in the Irish property markets”, Lloyds said in its half-yearly earnings statement.
About 14 per cent of its Irish loan book was impaired at the half-year stage, the bank said.
The Companies Registration Office records show Ulster Bank Holdings (ROI) Ltd has received four capital injections from RBS since February.
Lloyds has provided its Bank of Scotland (Ireland) unit with two payments since December.
The latest injection of €500 million in August is part of RBS’s “ongoing capital management,” a spokeswoman said in a statement. A spokesman for Bank of Scotland Ireland declined to comment.
Ulster Bank warned of rising loan impairments for the rest of 2009 as it reported a nine-fold increase in bad loans and a first-half loss of €8 million in August. At the height of the property boom in Ireland in 2007, Lloyds’ Irish operation posted a pretax profit of €272 million, up 28 per cent.
In the same year, Ulster Bank profit rose 22 per cent to £513 million. – (Bloomberg)
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