RegSol Blog

Enforcement Action: Ulster Bank (Ireland) DAC fined €4,600,000 by the Central Bank of Ireland

March 2020

The Purpose of Corporate Governance is to build and strengthen:
  • Accountability
  • Credibility
  • Transparency
  • Integrity
  • Trust

Transparency can reinforce sound corporate governance and enable a bank’s stakeholders, supervisors and the general public to judge the effectiveness of its board and senior management. Directors and senior management are thus made more accountable for their actions and performance. Yet, despite being the subject of three previous settlement agreements (all of which included corporate governance failings), Ulster Bank was on 3 March 2020, reprimanded and fined €4,600,000 for more corporate governance failings relating to regulatory returns that were required under the Mortgage Arrears Resolution Targets (MART) Framework.

The three previous settlement enforcement actions taken by the Central Bank were as follows:
  • 2016 - breaches concerning money laundering and terrorist financing
  • 2014 - IT governance failures
  • 2012 - breaches of liquidity and capital requirements
This persistent pattern of behaviour puts into question ethical behaviour at Ulster Bank, given that these failings appear systemic and most likely stem from a dysfunctional culture; responsibility for which ultimately rests with the Board. The Central Bank’s investigation found serious failings in Ulster Bank’s approach to the compilation and submission of its returns.  

These included:
  • Failure to implement effective oversight of the MART return process; and
  • Failure to have in place and maintain procedures, internal controls and reporting arrangements.
Banks were required under the MART Framework to report details on the level of mortgage arrears to the Central Bank on a regular basis. Essential to this requirement was ensuring the integrity of the data submitted to the Central Bank. The Central Bank had informed Ulster Bank of governance failings around the compilation of its MART returns in 2013, and the Firm committed to taking action.  However, it was not until 2015 that the Firm acted to address the issues. The delay in putting remediation plans into action, lack of transparency, and established pattern of problematic behaviour led to this fourth failure in corporate governance at Ulster Bank. The Board and Senior Management may be in the firing line.
For more information click HERE

By Judy de Castro - Regulatory Consultant