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RBS Irish unit fined $2.5 million over capital rules

DUBLIN (Reuters) - The Irish Central Bank has fined Royal Bank of Scotland's Irish unit 2 million euros ($2.5 million) for violating liquidity and capital rules, in the latest regulatory blow to the nationalised British bank.

RBS is already under investigation by U.S. and UK authorities over the Libor interest rate rigging scandal and for possible breaches of U.S. economic sanctions against Iran.

The Central Bank said RBS subsidiary Ulster Bank reported a capital shortfall in March last year of 313 million euros. The firm immediately received a capital injection from RBS to rectify the shortfall.

Ulster Bank lacked sound strategies and processes to assess its capital levels during the period of the violations, between January 26 and September 13, 2011, the central bank said.

It failed to apply the correct haircuts to four categories of retail and corporate deposits, failed to maintain effective internal controls for the management of liquidity risk and excluded certain cash inflows from the calculation of its liquidity position, the statement said.

Ulster Bank said in a statement that the violations had not affected customers and that it had since implemented "a number of robust measures to ensure similar contraventions are not repeated."

The central bank said it considered the issue was now closed.

(Reporting by Conor Humphries; Editing by David Cowell)

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