Fingleton: 'INBS bailout could have been billions less'
Former Irish Nationwide chief executive Michael Fingleton has claimed he has identified evidence to show Nama stands to reap a €1bn profit as a result of the 'undervaluation' of 20 prime assets belonging to eight of the building society's biggest borrowers.
Mr Fingleton made the claim in an exclusive interview with the Sunday Independent following his appearance before the Banking Inquiry last Wednesday.
The former Irish Nationwide boss said he had already gathered and evaluated evidence to support his assertion in relation to the €1bn figure. He said he was now awaiting further documentation which he believes may help him prove that other Irish Nationwide loans had been "excessively discounted" when being transferred into Nama.
Asked for his response to the assertion made by Fine Gael TD Kieran O'Donnell at the Banking Inquiry that in terms of its size and scale, Irish Nationwide's €5.4bn collapse had in relative terms been the "biggest single banking failure in the history of the Irish State", Mr Fingleton denied this was the case.
He referred to a speech given by Central Bank Governor Patrick Honohan in Beijing in August 2010 in which he stated that Irish Nationwide was set to require the far lesser sum of €3.2bn to be recapitalised.
Mr Fingleton questioned how official estimates of the figure had ballooned by billions from the one given by Mr Honohan within a matter of weeks.
He said: "Six weeks later, the minister [Brian Lenihan] announced in the Dail another €2.7bn would be required, instead of three or four hundred million. Obviously the governor [Honohan] would have had all the up to date information of the valuations pertaining to loans and he wouldn't be making a statement of that nature unless he had the information. I don't know how, between August 17 and September 30, 2010, the figure jumped from €3.2bn to €5.4bn."
Asked if he believed the outcome for the taxpayer would have been any better had Irish Nationwide's loans not been transferred to Nama and remained to be managed by the building society's personnel instead, he said: "I think generally the loans should have been left with the banks with all the knowledge and experience. I have no doubt they [the banks] would have gotten a better result for the taxpayer. I think the loans were excessively discounted. Nama established too low a base for all the vulture funds that came in, in terms of negotiation [on price]."
A spokesman for Nama rejected the claims being made by Mr Fingleton in relation to its valuation of Irish Nationwide's loans and those of the other Irish banks, saying: "The
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Nama valuation process for loans which it acquired was approved by the European Commission and included an element of overpayment compared to the then value of the underlying security for the loan at the valuation date of November 2009. Nama overpaid by €5.6bn, which was state aid to all the institutions."
Turning to the issue of the 2008 bank guarantee, Mr Fingleton restated his position that Irish Nationwide had been solvent on the night it was introduced.
"On the night of the guarantee, it was clear to us and to everybody else," he said. "The information was available. The Financial Regulator had all the information in relation to the society. Goldman Sachs had done an analysis and supplied the information to the Department of Finance and the regulator, which clearly showed that the society had in excess of €3bn, which was available in cash, unlike other institutions.
"Many of the officials that night didn't seem aware that we had this much cash, but the question of nationalisation of Irish Nationwide disappeared. We weren't insolvent. The definition of insolvency is that you are not able to pay your debts on the day. We were well able to pay our obligations on the date of the guarantee."
Asked if the same situation had applied in relation to Irish Nationwide's solvency before and after the date of the guarantee, he added: "We had over €2bn liquidity. We had capital of €1.3bn apart from the €3bn in liquid assets.
"On September 20 (2008), the government had raised the guarantee on customers' deposits from €20,000 to €100,000. Some 95pc of our depositors would fall into that category, and following that guarantee our withdrawal levels reduced significantly to the very low millions. The chairman [Dr Michael Walsh] said in his evidence, less than €20m was withdrawn [once the guarantee was increased]."
Of the criticism which has been directed at him before and since his appearance before the Banking Inquiry, Mr Fingleton said: "I understand it because it comes off the back of a perception, and one that the media has projected over the years.
"People are relying on the media for their information. I hope that the evidence I gave, and the evidence Dr Walsh gave, and that the secretary of the society, Stan Purcell, gave, gives people a better insight into how the society was run, and my role in that."
Unlike other witnesses to the Banking Inquiry, Mr Fingleton didn't offer the kind of fulsome apology which the media and the public have become accustomed and inured to.
Asked why, he said: "Well I expressed my regret absolutely to everybody and that to me was an admission, an apology as far as I was concerned. Apologies are, you know, they seem to be the nature of modern society. It's the genuineness of the apology and the sincerity of it that counts. I expressed total regret; that I think said it all."