Hundreds of investors in an Ulster Bank investment fund have been told its value is down 14.6 per cent because of the write-off of a deferred tax asset, reports Colm Keena

The 480 investors affected are estimated to have lost an average of approximately €10,000 each as a result of the development.

The total value of the loss is thought to be in the region of €5 million, although this could not be confirmed last night. The current fund value is €30 million.

Write-offs in three other funds mean a total of 1,300 investors in Ulster Bank funds have seen their investments drop in value because of the re-assessment of deferred tax assets.

In the case of the three other funds, the falls in value ranged from 3.6 per cent to 0.8 per cent.

The value of the total loss from the three is not known.

The customers were contacted by the bank last week. The write- offs are permissible under the rules of the funds and were approved by the trustees.

It is understood there is no question of compensation being paid.

The Irish Financial Services Regulatory Authority has been informed.

The administrators of the funds decided that the gains against which past losses could be used for tax reasons were not going to occur in the period required.

The hardest hit fund was the International Share Portfolio. The other funds affected were: the Capital Bond Portfolio; the Universal Portfolio; and the Cash Fund.

In 2002, provision was made for deferred tax assets. This is where a value is put on the possibility of future taxable gains being offset by past taxable losses.

Recently the decision was deemed affected by negative investment performance and an unexpected number of redemptions in one of the funds.

Ulster Bank Investment Funds Ltd, which administers the funds, recently decided to reduce the size of the deferred tax asset in relation to the International Share Portfolio Fund. It subsequently decided to write off the asset entirely. A similar decision was then taken in relation to the other three funds.

Ulster Bank operates a range of investment funds of which the four affected form a part.

In a statement to The Irish Times last night the bank said: "Ulster Bank Investment Funds Ltd confirms that it has written off a deferred tax asset representing 14.6 per cent of the International Share Portfolio. The writedown is due to negative investment performance and redemptions."