Disorder at AIB revealed in meeting with Somers
TDs and senators shocked by the 'picture of dysfunction' at bank
A shocking picture of dysfunction at Ireland's biggest bank, AIB, has been painted by a director directly appointed by Finance Minister Brian Lenihan.
Addressing a meeting of 32 Fianna Fail TDs and senators last Wednesday, former NTMA chief executive Michael Somers bluntly revealed how he and his fellow board members were struggling to rebuild AIB in the face of public anger and a suffocating bureaucracy that has arisen from the Government's determination to secure tighter control of the banking system.
During a presentation on the economy to the Lemass Forum in Leinster House, Dr Somers fielded questions from the politicians on his experience and knowledge of AIB's day-to-day workings since his appointment to its board last January.
Asked to outline what loan financing the bank was providing to small and medium businesses in view of its recapitalisation by the State, Dr Somers said that AIB had lent little or no 'new money', and explained how the vast bulk of the funding provided by the taxpayer was being taken up with the refinancing of existing loans and overdraft facilities.
He went on to explain how difficult it was to concentrate on conducting the normal business of a bank when all the board's time was taken up dealing with other issues.
One TD who attended the meeting told the Sunday Independent how he had been "unnerved" to hear Dr Somers' description of how upwards of 400 AIB employees are engaged full time in preparing documentation solely for the transfer of development loans to Nama. A further 600 staff find their days taken up sorting through historical documentation, the meeting heard.
The former NTMA chief also told the politicians how the bank was being overrun with consultants and regulators, which made it difficult to focus on getting the bank going again as a business. At present, teams from consultants from three separate accounting firms -- Price Waterhouse, Mazars and Deloitte -- are onsite at AIB headquarters, scrutinising its operations.
Fianna Fail TDs and senators also heard how the Financial Regulator Matthew Elderfield frequently sends one of his officials to sit in on the meetings of the AIB board.
One TD remarked: "The bank sounded to me to be completely dysfunctional. He took his time answering our questions, and the answers were absolutely shocking. People didn't leave the room. They were stuck to their chairs listening to what he had to say."
Addressing the issue of the Government's Credit Institutions (Stabilisation) Bill, the provisions of which will now be examined by President McAleese and the Council of State on Tuesday to determine whether they are in conflict with the Constitution, Dr Somers told the TDs and senators of his fears of the damage the new legislation would do to Ireland's reputation amongst existing and potential international investors.
"He put it fairly bluntly on the banking legislation alright. He asked what we thought foreigners looking at Ireland would think if we had a law which allowed for our finance minister to set aside a contract on a whim, or limit access to the Supreme Court. It's a valid point. Why would you come to Ireland to do business if the Government can change the rules whenever it suits them?"