independent

Thursday 17 April 2014

Ex-regulator red-faced as bank hit by €2.75m fine

Ex-regulator Liam O'Reilly

THE Financial Regulator has slapped its largest-ever banking fine on a bank whose board includes former Financial Regulator Liam O'Reilly.

Last Friday, IFSC-based Merrill Lynch International bank was fined a record €2.75m for two major trading incidents, which saw the bank lose €306m. Mr O'Reilly is a non-executive director of the bank, having joined the board in March 2007.

Mr O'Reilly retired as the financial regulator in 2006 as bank lending soared. He was replaced by Patrick Neary.

Merrill Lynch International isn't the only bank with Liam O'Reilly on its board to stumble into crisis.

The former financial regulator also sits on the board of the beleaguered Irish Life & Permanent, which lost its boss Denis Casey and other top executives following the Anglo loan deposit revelations earlier this year.

Recently it emerged that Mr O'Reilly was sitting on the accountancy body that was investigating the fall-out from the deposits scandal. He subsequently stepped down from the Chartered Accountants Regulatory Body several months into the probe.

Earlier this year, former AIB internal auditor Eugene McErlean suggested that Mr O'Reilly, as regulator, had failed to act against overcharging at AIB in the years leading up to 2001.

Apart from the fine, Merrill Lynch received a strongly worded reprimand, which must have shaken the subsidiary of the $140bn Bank of America. Merrill Lynch International Bank is part of the Merrill Lynch corporate empire.

Merrill Lynch was a key adviser to the Government as it concocted Nama and the bank bail out scheme. Merrill Lynch received close to €6m in fees from the state.

The Merrill Lynch International fine is the largest fine ever handed out to a bank by the regulator. The financial watchdog fined Quinn Insurance €3.25m last year.

Sunday Independent

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