Ulster Bank, the Irish subsidiary of the British government-owned RBS Group, has obscured the true scale of loan losses amounting to over £1.75bn (€2.1bn) here by shunting huge amounts of impaired loans into a so-called non-core entity or 'toxic skip'.

Half-year figures the bank published on Friday also dramatically show that the housing market in Ireland is deteriorating rapidly. The proportion of the bank's home loans falling into negative equity here is higher than RBS's units in Britain and the US, which are among the most stressed residential markets in the world.

Ulster, run for the past six years by outgoing chief executive Cormac McCarthy, officially reported that it had written off loans worth £499m, the second-highest of its UK and US operations.

But the bank's core loan loss was dwarfed by the £1.25bn impaired loans Ulster removed into its so-called non-core vehicle, described by industry experts as its toxic skip. Ulster's non-core loan losses for the half year, which accounted for over a third of RBS's worldwide £3bn non-core loan losses, were larger than the impaired loans RBS reported for its UK corporate lending division and in all its retail and commercial lending in the US.

The figures also show that Ulster's all-Ireland £20.5bn residential mortgage loan book, of which 90% is in the Republic, is under huge pressure.

Ulster said 28% of its home loans book was in negative equity at the end of June, compared to less than 20% six months earlier.

Comparable figures show only 5.7% of RBS's home loan book in the UK had comparably high loan-to-value ratios. Its Citizens Bank in the US reported that 19% of its loan book had LTVs of more than 100%, a slight improvement since December.

Nearly 8% of Ulster Bank's mortgage book was showing repayment stress, with 4.8% in arrears and another 3% in forbearance, which means they were restructured for customers having difficulty making payments. McCarthy said buy-to-let mortgages continued to deteriorate as well.

About €5bn mortgages were moved out of the non-core entity and put back onto the bank's balance sheet, as they were showing similar performance characteristics to the core loan book. A similar amount of development loans are moving in the other direction as Ulster Bank effectively abandons development lending.

McCarthy said he hoped 2010 would mark the peak of impairments for the bank, but he expected mortgage arrears to increase through 2011.