ULSTER BANK has posted a £368 million (€414 million) operating loss for 2009 in its core business, but declined to reveal the loss for the overall bank, including the “non-core” element which comprises the most impaired loans.

The bank, which is owned by the part-nationalised UK banking group Royal Bank of Scotland (RBS), had already stripped out £16.7 billion of “non-core” loans into the separate unit, leaving £39.7 billion in the core business. The bank discloses the operating performance of the core unit only.

Cormac McCarthy, chief executive of the bank, said the non-core operation could be considered the bank’s “internal Nama”.

Loan losses in Ulster Bank’s core business topped £649 million but this jumped to £1.9 billion, about 3.4 per cent of overall loans, when bad loans from the non-core part of the bank were included.

“It’s a big number,” said Mr McCarthy. “The majority of it would be corporate and the majority of that would be against land and development.”

The bank experienced a five-fold increase in loan losses from the £410 million posted for 2008.

Ulster Bank has received £3 billion, including £500 million just before Christmas, in capital support from its parent, RBS.

“This year is going to be very tough. The economy is acutely stressed. We expect to continue to suffer impairments. As that continues, capital support will continue to be provided as needed.”

Arrears of 90 days or more were running at 3.3 per cent of the bank’s mortgage book, up from 1.5 per cent in 2008. There were 70 repossessions in the Republic.

Mr McCarthy said the bank’s share of the mortgage market has fallen to “low single digit” in percentage terms – down from a traditional level of about 20 per cent.

Ulster Bank offers high mortgage rates, he said, but denied this was a means of cutting lending.

“We are happy to do the business but only a price that makes economic sense to us,” he said.

Some £20 billion in loans, including £12 billion in the core unit, have been insured against losses by the British government under the asset protection scheme, the British alternative to Nama for toxic assets, he said.

Mr McCarthy said he had waived his bonus for 2009 and was taking a cut on the £870,000 salary he received in 2008.

RBS, which is 84 per cent owned by British taxpayers, posted the largest 2009 loss of any European bank. The bank’s £3.6 billion loss was lower than the £5 billion expected by analysts and well below the £24 billion lost in 2008.

Bad debts rose sharply to just short of £13.9 billion, up from £7.4 billion in 2008, although the bank said it believed they had peaked.