The former head of Ulster Bank says he was "surprised" to find out about the government's bank guarantee when he learned about it on the news.

Cormac McCarthy says he only discovered the government was guaranteeing six banks when he heard about it on the news on the morning of September 30th.

Ulster Bank was not covered by the guarantee because it is owned by Royal Bank of Scotland (RBS), which has its headquarters in the UK.

Mr McCarthy told the Banking Inquiry the guarantee hurt his bank because people moved their money elsewhere - but he was surprised to hear it was being introduced.

“The first I knew about the guarantee was when I heard it about it on the news on the morning of 30th of September 2008,” he said.

“I was surprised since I had been in touch with the financial regulator on two occasions in previous weeks because of the obvious stresses in the funding market,” he added.

Mr McCarthy also told the Inquiry that he regrets offering 100 per cent mortgages, because of the impact they had on the property sector.

He said that allowing customers to borrow the entire price of a house led banks to become too exposed to the property market.

Mr McCarthy was chief executive of Ulster Bank from 2004 to 2011, and before that ran First Active, which was the first bank in Ireland to offer 100% mortgages.

However, he told the Banking Inquiry that borrowers didn't need to take out 100% mortgages to end up in negative equity

“In reality the collapse in house prices has been of such a magnitude that almost any mortgage written after 2004 with a loan to value in excess of 50% subsequently went into negative equity,” he said.

“With benefit of hindsight the introduction of 100% mortgages was a detrimental initiative, which became all too apparent as property values collapsed,” he added.

The Inquiry is currently in its Nexus phase, which is focusing on three elements: banking systems and practices; regulatory and supervisory systems and practices; and crisis management systems and policy responses - and how these elements interacted with each other.