Banking Inquiry: EBS was not 'root case' of finance crisis - ex director Merriman
The EBS was hamstrung by legislation and “like a tsunami was essentially in the wrong place at the wrong time, according to its former Director of Finance Alan Merriman.
The Society was “definitely not a root cause” of the financial crisis. It was a casualty of this one in 100 year event, Mr Merriman told the Banking Inquiry.
He said the EBS had fought the good fight and yes it had failed but it was not for the want of trying.
Successive governments and authorities both here and internationally had much to answer for and more so than EBS.
Mr Merriman stressed that he did not anticipate the extent of the cliff which the global economy and Ireland and EBS with it went over.
“I did not anticipate that it was going to be as shocking as it got”.
He had sat in many meetings with the Central Bank and the Regulator during 2008 and 2009 “at the highest levels and can assure you, they assured us, that these issues would pass and we just had to put our heads down and get through it.”
Mr Merriman’s view was that when the tail risk came “the Irish banking model as it had evolved over a substantial period of time and EBS along with it could not withstand it”.
He described how in 2009 the impairment provisions at EBS were “disturbing to say the least and we had to keep moving the loan loss number up as we learned more and as the economy deteriorated further.”
There was not one single cause but “rather a multitude of collective weaknesses or vulnerabilities or cockroaches”.
Mr Merriman felt the EBS “as a whole and its members were casualties of the crisis. They were not the making of it”.
He believed “with strong conviction” given the circumstances and what EBS had to work with “the Society and its values would have been lost one way or the other”.
Hamstrung by legislation, concentrated lending, reliance on wholesale funding and trying to compete with much larger and commercially short term driven organisations all became life threatening issues for the society.
He concluded that banking generally as a result of the crisis “will radically change for the better in the decades ahead.
“The move to mobile and new technology will, I think, disrupt the incumbants and empower the customer.”
Whether “the Lendingclub.coms or Starbucks become the new modern day substitutes for EBS and take on the baton of offering a better alternative to the banks, time will tell”.