IN EXCESS of 400 banking jobs will be eliminated in a merger of former building society First Active with sister lender Ulster Bank.

Their parent Royal Bank of Scotland (RBS) is finalising a strategic review of its Irish operations, which is likely to lead to the closure of most but not all of First Active’s 60 branches. A formal announcement of this move is imminent, it is understood.

The looming cuts at First Active follow a spate of job losses since the start of the year in major employers such as Dell, Superquinn, Dublin Bus, Bus Éireann and others.

They represent a significant retrenchment by RBS, which reported Britain’s biggest corporate loss one week ago and which wants to cut costs in its Irish unit. Up to 10,000 jobs in the international operations of RBS are under threat in a global restructuring.

In recent days, ratings agency Moody’s downgraded its ratings of Ulster Bank and First Active, citing Ulster’s relatively large exposure to the property and construction sector in Ireland.

Moody’s said this was likely to lead to weakening asset quality and substantially higher provisions over the next couple of years. “This, together with the deterioration in the economic environment, will lead to depressed profitability at the bank and means that capital generation will be challenged over the same period,” it said.

Pressure on the Irish banking system at large may yet lead to big job cuts in some of the other Irish lenders as they grapple with rising bad debts and the contraction of the economy.

First Active and Ulster Bank have been run as separate organisations since RBS acquired First Active five years ago this month. The former First National Building Society, which took a stock exchange listing in 1998, was established 1861 as the Workingman’s Benefit Building Society.

“Like many businesses, Ulster Bank Group is having to respond to prevailing market conditions and review how we operate our business,” a bank spokeswoman said. “However, we consult with our employees and their representative bodies ahead of any specific announcements as a matter of policy.”

• Although the Department of Finance had contact at official level last Friday with AIB and Bank of Ireland on a deal to recapitalise the two institutions, the weekend passed without any final agreement to bring forward the recapitalisation before markets reopen this morning.