Ulster Bank reports £8m loss

Ulster Bank has posted a first-half operating loss of £8 million compared to a profit of £172 million for the same six-month period a year earlier as loan losses began to mount.

The bank said this morning that it made a loss of £8 million due to a sharp rise in loan losses to £157 million, £107 million of which were business loans.

Mortgage arrears rose to 2.7 per cent during the first half of 2009, as against 1.5 per cent for the preceding six-months.

Total lending to customers was flat over the six-month period, with mortgage lending up just 2 per cent, but deposits down 17 per cent to £18.9 billion.

Ulster Bank confirmed that it may cut another 250 jobs in Ireland. However, its chief executive officer Cormac McCarthy insisted this morning that its parent, Royal Bank of Scotland, remains committed to the unit.

Earlier this year the bank said it was to cut 750 jobs from its Irish operations, with 550 to be lost in the Republic.

Speaking on RTÉ's Morning Ireland, Mr McCarthy said that a voluntary redundancy scheme introduced in January had been  heavily over-subscribed.

The Irish Bank Officials Association (IBOA) said it was disappointed by the news but had been given an undertakingthat all job losses will be implemented on a voluntary basis and on the same terms as the programme for redundancies which is already under way.

IBOA general secretary, Larry Broderick said that the bank’s senior management hadindicated that its Corporate Markets and Central Services divisions will be the focus for the latest round of job losses

Ulster Bank's parent, Royal Bank of Scotland, posted a £1.04 billion irst-half loss as it set aside £7.52 billion to cover bad loans.

This compares to a net loss of £827 million a year earlier, the Edinburgh-based bank said today in a statement.

"Our first half results, as we had clearly warned, are poor," said chief executive officer Stephen Hester said .

"There is every sign that our financial performance over the next two years, at a group level, will be poor due to the severe economic downturn in 2008 and 2009 and consequent impact on impairments and funding costs," he added.

The bank reported a £3.8 billion gain on subordinated bonds it bought back or exchanged at a discount. In April, the bank estimated that gain at £4.5 billion .

RBS restated its 2008 loss to £24.3 billion pounds, the largest in British corporate history. The loss includes writedowns from its takeover of ABN Amro.

Additional reporting: Bloomberg