The technology breakdown at Ulster Bank last summer is to be investigated by the new financial regulator in the UK, along with investigations into its parent company Royal Bank of Scotland.
The Financial Conduct Authority (FCA), which took over regulation of financial services companies at the start of this month, said it had started an enforcement investigation into the breakdown.
If it finds that there were systemic failures behind the technology problems, the bank could face a fine, or individuals could be censured and banned.
The issues started in mid-June when customers found they could not access their accounts online, or withdraw or transfer money.
Accounts at Ulster Bank did not operate as normal for many weeks and it took longer to fix the technical problems at Ulster Bank than the other RBS divisions.
The bank has paid €52m in compensation to Irish customers affected by the error.
In total, the glitch affected up to 17 million customers of Royal Bank of Scotland, Ulster Bank and NatWest.
Public confirmation of a probe prior to its completion is unprecedented for the regulator. Royal Bank of Scotland could face a fine, censure or both.
RBS has already taken a £175m sterling hit to cover costs and compensation relating to the calamity, while the incident prompted chief executive Stephen Hester not to take his 2012 bonus.
"The Financial Conduct Authority has started to conduct an enforcement investigation into the IT failures at RBS which affected the bank's customers in June and July 2012. The FCA will reach its conclusions in due course and will decide whether or not enforcement action should follow that investigation,'' the Financial Conduct Authority said.
It is rare for the regulator to launch a formal probe into a firm over an IT failure. The overwhelming public interest in the case is believed to have prompted the FCA to stray from its usual remit of investigating market abuse, mis-selling and data security lapses.
RBS did not give details on what went wrong in the summer, but it reportedly followed an attempt to install a software update on RBS's payment processing system, which was then corrupted. It meant account balances were not updated properly overnight and credit and debit balances failed to show up as quickly as they should.
At the time, RBS promised no one would be left out of pocket by the chaos, and extended branch opening hours to deal with the backlog.
The bank is running its own probe into the issue. Customers were also recently hit by problems with RBS's mobile banking application on smartphones, which affected services for a few hours in March.
"Last summer's IT failure was unacceptable. We have already made significant improvements and over the next three years will invest hundreds of millions of pounds in our systems, '' an RBS spokeswoman said.
"We will be working closely with our regulators in the UK and the Republic of Ireland. Our customers deserve a service they can rely on 100% of the time and that's what we want to provide,'' she added.