Mr. Jim Brown:

I thank members of the committee for the opportunity to provide an update on Ulster Bank's progress and to address the areas outlined in the invitation from the committee. I will make a brief statement and I will respond to any specific issues the committee wishes to address.

Ulster Bank is the third largest financial institution in the Republic of Ireland. We are unique as the only systemic bank operating across both the Republic and Northern Ireland that is owned by an international parent with a global network. We are an integral part of the financial and social economies in both jurisdictions and we believe that a healthy and functioning financial services sector is essential to a vibrant, competitive and sustainable economy. We recognise and greatly appreciate our role and responsibilities in this regard.

Ulster Bank has a significant presence across the island of Ireland. We employ more than 5,500 people in a network of 199 branches and serve almost 2 million customers. We have lending in excess of €27 billion in the Irish economy and hold approximately €25 billion in customer deposits. We also hold strong market positions across the business with improving trends in all areas. Over recent years we have had a clear strategy to manage our legacy issues while at the same time build a really good bank for our customers. On that point, I reiterate my comments yesterday in accepting the fine imposed by the Central Bank as a result of its findings following the IT incident. I am pleased to confirm that since then we have invested heavily in both our governance and systems to avoid any similar incident happening again.

Our strategy is working with a number of tangible results. First, early this year we returned to profit. Our must recent quarter 3 results continue to demonstrate this progress, with an adjusted operating profit of €569 million in the year to date. Most important, these results demonstrate our continued focus on the needs of our customers.

On business lending, our €1.2 billion Ahead for Business fund has provided almost €1.1 billion of credit into the market to the end of September. We have just launched a series of new fixed-rate mortgages and we expect to provide approximately €500 million in mortgage financing this year.

We are also making considerable progress on mortgage arrears and have achieved month-on-month reductions in arrears every month for the past 19 months. My team and I have constantly, consistently and publicly affirmed our core objective, which is that we want to keep co-operating customers in their homes. I am pleased to confirm that in excess of 8,000 customers who had been in arrears are now up to date with payments.

Second, the committee will be aware that Ulster Bank recently passed the comprehensive assessment undertaken by the European Central Bank. This demonstrates the progress we have made in recent years in strengthening our balance sheet, a process which has continued through 2014. Since the effective date of the review we have further increased our common equity tier 1 ratio to 17.3%, a figure which we believe to be the strongest capital position of all full-service banks in Ireland.

Looking to the future, the recent announcement by RBS confirming Ulster Bank's core status and good strategic fit with its retail and commercial banking businesses is a key development and proof of a commitment to Ulster Bank as an integral part of RBS. It is important to note that this decision was based on the assessment that Ulster Bank has strong potential and is capable of making an appropriate return. Following this commitment, we will continue with a dual strategy of strengthening our market-leading position in Northern Ireland through greater alignment with the United Kingdom while building a challenger bank in Ireland. Our ambition is to become the No. 1 bank for customer service throughout the island of Ireland.

Before I conclude and take questions, I wish to take this opportunity to reiterate our observations on the recent announcement of the Central Bank regarding new mortgage lending. A rebound in property prices following a crisis is not unusual and we recognise the need for the Central Bank to take steps to avoid overheating in the credit and property markets. However, the proposals as they stand will impact on the ability of many first-time buyers to acquire homes. In addition to this, other hopeful first-time buyers will struggle to save a high deposit while paying increasing rents. We estimate that 68% of the first-time buyer mortgages approved by Ulster Bank this year would have fallen outside the proposed loan-to-value or loan-to-income criteria. The economy and marketplace in a country such as Ireland are dependent on a fully functioning mortgage market, and we welcome the opportunity to contribute to the consultation on how best to achieve this.

Let me reiterate that Ulster Bank is and will remain an integral part of RBS and is fully committed to the island of Ireland. Following the comprehensive assessment by the European Central Bank, we believe we hold the strongest capital position of all the full-service banks in Ireland. We have a clear strategy. We have returned to profit and we are making strong progress towards becoming a simpler, more efficient and sustainable bank.

We actively support the mortgage and business markets by providing increased lending and specialist sector support. We look forward to continuing our progress in 2015 and to supporting the recovery in the economy as a challenger bank that provides much-needed competition to the market.