THE Government's two appointees to the board of Permanent TSB are to step down, it has been confirmed.
Former Fianna Fail minister Ray MacSharry and retired senior civil servant Margaret Hayes will not stand for re-election at the lender's annual general meeting next May.
Both joined the board of the bailed-out bank as "public interest directors" (PIDs) in 2008 after the bank guarantee was brought in.
They are believed to have been waiting to leave the board for some time.
Mr MacSharry said he had planned to leave after three years, but had been asked to stay on 18 months ago.
In a statement, the bank's chairman Alan Cook described both directors as "valued colleagues and have made enormous contributions to the Board during their respective tenures".
The Government did not comment on the move yesterday. The Department of Finance is considering whether or not it will nominate replacement directors. The resignations bring to a close what had been a controversial time for both on the Permanent TSB board.
Ms Hayes and Mr MacSharry earned more than €400,000 between them for their time on the board, but had little power to prevent the bank from taking moves that were at least perceived as not being in the public interest.
The bank has more than doubled the interest rate it charges thousands of people on standard variable mortgages since they took their positions, while both were heavily criticised for their performance before the Oireachtas finance committee last December.
Justice Minister Alan Shatter accused Mr MacSharry of being "seriously out of touch" after he told the committee there would be no debt forgiveness from Permanent TSB.
"Our role does not differ from any other director on the board," Mr MacSharry had said.
Speaking last night, the former finance minister said the criticism had played no part in his decision to step down.
"I've been doing this for nearly five years now, it was initially just for three but I was asked to stay on.
"Now, however, it is the right time for me to take a step back," he said.
The move has sparked a debate on the role of public interest directors and whether the scheme should be maintained. The directors were brought in as watchdogs to monitor the banks after the state guarantee but, after AIB and Permanent TSB were nationalised, that watchdog role became less clear.
Neither Bank of Ireland nor AIB's PIDs are expected to step down this year.
Fianna Fail's finance spokesman, Michael McGrath, said the move should prompt a rethink of how the PID system is structured.
"The Government should nominate replacements, but there needs to be a clear plan as to what is required of them," he said.
"As things stand, the finance minster meets with the banks' chairman and chief executive, not the PIDs, and they have little real power to act as they should," he said.
"If the roles are to be maintained, they must meet the minister regularly, and separately, to the rest of the board," he added.