Ulster Bank under spotlight at Westminster inquiry

The future of the Ulster Bank will be under scrutiny

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A wide-ranging inquiry into how banks operate in Northern Ireland is under way at Westminster.

It is examining lending practices and the future of the troubled Ulster Bank.

The government is considering whether to split the Ulster from the Royal Bank of Scotland group, due to its toxic property debts. Earlier this year, Ulster Bank posted losses of £1bn.

The inquiry is being run by the Northern Ireland Affairs Select Committee.

In written evidence to the inquiry, Finance Minster Simon Hamilton said it would be "hugely damaging" if all of the Ulster Bank was placed in any sort of "bad bank".

"The Ulster Bank is crucially important to the Northern Ireland economy," Mr Hamilton said in a paper sent to the committee.

"The governance of Ulster Bank is for the treasury to decide.

Start Quote

Banks are lending, but not enough. There is an issue with demand coming in through the door”

End Quote Simon Hamilton Ulster Bank

"The biggest problem Ulster Bank face is their bad property debt. They need to act quickly on that."

The possible break-up of the Ulster and RBS is just one issue the committee is examining.

Over the coming three months, it will look at the way banks are run, how they provide finance to small and medium sized businesses and access to banking in rural communities.

Some politicians and customers have accused Northern Ireland's banking sector of failing to lend to viable businesses.

The other main banks are First Trust, Bank of Ireland and Danske.

Mr Hamilton, who will appear before the committee at a future stage, told the BBC that the lending of all the main banks was jeopardising the recovery of the local economy.

"We get data from all the main banks on a confidential basis," he said.

"The amount of net lending is going down. It does also show that 90% of loan applications are being approved.

"That is a reasonably impressive rate. Banks are lending, but not enough. There is an issue with demand coming in through the door."

The Consumer Council will be the first to give evidence before the committee when the inquiry convenes on Wednesday afternoon.

At later stages, it will question officials from the main banks before issuing a report early next year.

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