Ulster Bank has agreed a two-year pay deal for staff which will see workers get their first pay rise in over three years.

The bank, which returned to profitability earlier this year, also confirmed the return of performance-related pay rises for managers from next year.

The agreement, if accepted by Ulster Bank’s 5,600 Irish staff, includes a pre-Christmas bonus of €700 for all non-managerial staff .

From next year, staff will also be in line for potential pay rises of up to 8 per cent depending on current pay and performance.

This will be the first pay increase awarded to staff since 2011 and for managers since 2010.

The bank received £15.3 billion of bailouts during the financial crisis via its parent Royal Bank of Scotland.

Under the new deal, managers and senior managers will return to performance-related pay reviews in the first quarter of next year, with any increases taking place no earlier than April.

The bank's head of human resources Kevin Keegan said: "Rewarding and motivating our people is an important element of building the best bank for customer service on the island of Ireland. "

“In line with Ulster Bank’s commitment to paying people fairly and recognising each individual’s contribution in returning the Bank to profit in 2014, we now have a comprehensive and fair two-year proposal, focusing on those at the middle and lower end of the salary scales in Ulster Bank.”

“All staff below managerial level will receive a lump sum payment before Christmas and an increase to pay for 2015 based on their position on the pay scale and performance,” he added.

The bank also plans to increase starting salaries for its clerical employees in Northern Ireland.

Larry Broderick of the Irish Bank Officials Association confirmed the conclusion of negotiations with senior management at the bank.

He said the proposals, which provide a performance-based payment for 2015 calculated by reference to an agreed pay matrix, would now be put to workers.

This provides for increases ranging from 0 per cent to 8 per cent — but most typically falling between 1.75 per cent and 2 per cent, he said.

“If accepted, this would represent the first increase for our members in Ulster Bank since 2011,” he said. The union’s Ulster Bank executive committee is recommending the proposals for acceptance by members.