THE IRISH Bank Officials’ Association (IBOA) said it was preparing to take legal action against Ulster Bank Group over the bank’s failure to honour existing staff contracts by withholding pay.

Speaking at a conference in Athlone, Larry Broderick, general secretary of the union, said it had set up “a substantial fighting fund” to pursue court cases against the bank.

Ulster Bank withdrew earlier this month from talks on pay and conditions that were chaired by Kieran Mulvey, chief executive of the Labour Relations Commission, and informed staff it would negotiate with them individually.

The union claimed this week that up to 6,000 staff at the bank face a 10 per cent pay cut unless they sign an inferior new contract.

The union said yesterday that it was preparing to take legal action on behalf of almost 5,000 members in the Republic and Northern Ireland for breach of contract.

A spokeswoman for Ulster Bank said in response that the bank would “continue to communicate with our employees directly”.

It is understood that the bank would vigorously contest any legal action taken by the union.

The union has also referred the proposed downgrading of staff pension entitlements to the Pensions Board and the Government.

“Put simply, our contention is that by failing to honour these contractual payments, the bank has in effect made an illegal deduction from our members’ wage packets,” said Mr Broderick.

The new contracts were “significantly inferior” to existing contracts, he said, and included a new clause which will “significantly undermine our members’ pension entitlements in the future”.

The union said the new contracts were to be issued next week and to be completed by the middle of next month. It said that staff were concerned they may be pressured to meet this deadline.