Ulster Bank has been fined €1.96m by the Central Bank for breaches of financial regulations on holding adequate capital and cash on hand.

The Central Bank published a settlement agreement between itself and Ulster Bank detailing a number of breaches of financial regulations by the bank.

These regulations require banks to hold specific levels of capital and cash on hand to meet their obligations depending on the level of risk to which they are exposed.

In one instance, in March 2011, the Central Bank says Ulster Bank was €313m short of the required level set out by the regulator in 2009.

Once it had identified the shortfall, Ulster Bank received an immediate injection of funds from its parent company Royal Bank of Scotland.

In assessing the financial penalty, the Central Bank said it took account of a number of factors including Ulster Bank's ability to access funding from RBS if needed.

The settlement agreement noted that Ulster Bank had also agreed to take action to ensure "accountability" from the staff responsible for the breaches of regulation, including "individual performance reviews and compensation packages being impacted".

The Central Bank said Ulster Bank took prompt corrective action to address and rectify the issues that led to the breaches. It confirmed that the matter is now closed.

The Central Bank's Director of Enforcement, Peter Oakes, said this is the first settlement by the Central Bank with a company for contravention of capital requirements and the third for contravention of liquidity requirements.

''This enforcement action and the penalties imposed reflect the importance the Central Bank places on compliance with all aspects of key prudential requirements regardless of whether or not contraventions of core Pillar 1 minimum capital requirements or liquidity ratios arise,'' he added.

Today's statement from the Central Bank shows that three liquidity breaches were identified. From January to September 2011, the bank failed to apply the proper discounts on cash flows to four categories of retail and corporate deposits.

Ulster Bank failed to notify the Central Bank immediately of this issue and it also failed to establish and maintain effective internal controls for the management of its liquidity risk.

Two capital requirement contraventions were also identified. The Central Bank said that in March 2011, Ulster Bank failed to comply with regulations by failing to hold funds in excess of the minimum level as required, while it also failed to have ''sound or effective strategies and processes in place''.

In a statement, Ulster Bank said that it can confirm that no customers were impacted, at any time, by the five contraventions.

''We are acutely conscious of our obligations to comply with financial and regulatory requirements. We remain committed to ensuring that all appropriate procedures and controls are in place, to ensure compliance,'' the bank said.

''This settlement is significant and we acknowledge that these contravention's, which occurred in 2011, were unacceptable,'' commented Ulster Bank's chief executive Jim Brown.

''We identified the contravention's ourselves and we have since implemented a number of robust measures to ensure similar contravention's are not repeated. I would like to highlight that, at no point during the period in question, were our customers affected in any way,'' he added.