ULSTER BANK took a bad debt charge of £3.8 billion (€4.4 billion) on loans of £51 billion in 2010, double the loan losses at the bank the previous year.

The bank’s UK parent Royal Bank of Scotland broke out for the first time the level of bad debt charges across both Ulster Bank’s core and non-core units since being set up.

Commercial property loans accounted for £2.7 billion of the bad debt charge, compared with £1.3 billion a year earlier, said the bank. Some £1.9 billion related to loans on property development. Most developer loans, about £9 billion, are in the non-core business.

The bank reports performance figures only on the core part of the bank which covers £36 billion of the overall £51 billion loan book.

The bank made a loss of £761 million in its core business, almost double the previous year’s figure. Almost £1.2 billion of the total £3.8 billion set aside to cover bad loans was in the core business.

This compared with £649 million the previous year.

“The impairments are higher which is consistent with what’s happening in the market,” said Cormac McCarthy, chief executive of Ulster Bank. “It’s disappointing but not unexpected.”

Before loan losses, profits at the core bank rose 50 per cent to £400 million due to cost-cutting, growth in deposits and improved pricing on the bank’s products.

Ulster Bank has reduced staff numbers by about 1,000 to 6,200 employees over the past two years.

The bank closed 45 branches and transferred 15 former First Active branches into Ulster Bank.

About 10,000 of the bank’s 90,000 mortgage customers have missed a payment.

Mortgages which are 90 days past due stood at 6 per cent of the bank’s £21 billion book, up from 3 per cent a year earlier.

The bank is showing forbearance on 7,383 mortgages that account for 5.8 per cent of loans.

Mr McCarthy said that the bank was not offering debt forgiveness to any of its mortgage borrowers.

Ulster Bank set aside a further £100 million to cover further losses on mortgages in the final quarter of last year due to higher unemployment and fiscal cuts.

RBS injected a further £3 billion into Ulster Bank, bringing to about £6 billion the total capital injected into its Irish subsidiary.

Mr McCarthy is standing down as chief executive in May. RBS has yet to choose a successor.

Ulster Bank’s high debt charges and a drop in investment banking dragged RBS to a £1.1 billion loss for 2010. The bank warned that Irish loan losses would remain high through the first half of 2011.

RBS, which was rescued with £45 billion during the financial crisis, is 83 per cent owned by the UK government.