Central Bank to give pre-crisis directors initial written warning
Published 09/06/2011 | 05:00
THE Central Bank will next week write to directors of bailed-out banks asking them to confirm if they intend to "still be in place" by January and warning them of the new powers to remove bank bosses who contributed to their institutions' collapse.
The letters come three months after Deputy Governor Matthew Elderfield announced a major review of bank directors and warned he would use new powers to "prohibit individuals from continuing as directors" if that was "appropriate".
The Central Bank's enforcement boss Peter Oakes is now penning letters to about 40 executive and non-executive directors at AIB, Bank of Ireland, Anglo Irish Bank, EBS, Irish Life & Permanent and Irish Nationwide.
The Irish Independent understands that directors will be given a "couple of weeks" to inform the Central Bank whether they intend to be in place next January, when new rules on 'fitness and probity' of bank bosses come into force.
The letter is primarily targeted at those who were in place in the crucial period leading up to the state bailout of their institutions.
The Central Bank views the "pre-crisis" cut-off point on a "case-by-case" basis, reflecting the fact that different institutions laid the foundations for their troubles at different times.
Next week's letter "reminds" bank directors of the Central Bank's powers to investigate the roles of those directors who were in place before their institutions ran into trouble, and require directors to submit documents and undergo oral exams.
The letter also references the Central Bank's power to issue a "suspension notice" to directors it has concerns about.
Sources described the letter as a "fact-finding" initiative to find out how many pre-crisis directors intend to still be in place on January 1, 2011.
Most of the bank directors who were in place before 2008 have already resigned or have announced their intention to step down in recent weeks.
Notable exceptions include Bank of Ireland chief executive Richie Boucher and Irish Life & Permanent boss Kevin Murphy, who have both resolved to stay put.
Once the Central Bank has a clearer picture of which pre-crisis directors intend to remain in place, it will then send out a more detailed letter to those individuals.
The Central Bank may also review the performance of incumbent bank bosses further down the management chain, including those on subsidiary boards, at a later stage.
The Central Bank's process comes against the backdrop of Finance Minister Michael Noonan's vow to remove all bank directors who were in place before the bank guarantee was introduced in September 2008.
Speaking in April, Mr Noonan said his position "always has been" that he doesn't "hold a director personally culpable for what happened in the banks prior to September 2008".
"But because it happened on their watch I think they should have moved on and I am glad that they are moving on now and new people have to be appointed."
The Central Bank has indicated that it is prepared to face down legal challenges in its bid to remove directors found lacking, but those efforts are expected to be stood down if Mr Noonan's clearout succeeds.