LONDON (AP) — Britain's chief financial regulator said yesterday that his agency had monitored Ireland's developing economic crisis over two years and was not lax as UK banks built up a massive exposure.

British bank stocks were mostly lower yesterday as the market fretted about the impact of Ireland's crisis, which has led to an international bailout.

British banks' involvement in Ireland is one of the reasons the government is prepared to loan some £7 billion ($11 billion) to the Dublin government as a contribution to the bailout.

Adair Turner, chairman of the Financial Services Authority, told a legislative panel that the exposure of the UK banking sector — estimated at nearly $132 billion — was "not out of line with what you'd expect".

He says that two part-nationalised banks, Royal Bank of Scotland and Lloyds Banking Group, took on most of the exposure because of their own operations in Ireland. RBS' exposure is estimated at $85 billion and Lloyds at $43 billion.

Turner said RBS and Lloyds built up their exposure not by a "sudden splurge" of loans to Irish banks or by buying sovereign bonds, but due to their presence in the country.

RBS owns Ulster Bank, which is operates in Northern Ireland and the Irish Republic, while Lloyds also had a significant business in Ireland.

Turner said the FSA first met about Ireland at the end of 2008 and had since had "nearly continuous" conversations over the crisis with the Treasury and Bank of England.