New powers to assess bankers
Published 22/03/2011 | 12:22
Top bankers not fit for the job will be suspended, sacked or banned from the financial sector under sweeping new powers to improve standards.
Regulator Matthew Elderfield will also have the authority to veto senior appointments as well as enforce rules that industry executives act honestly, ethically and with integrity.
"Once the new powers are in place, we will be able both to act as gate-keepers for individuals entering the industry and to remove individuals from their posts," he said.
"Where an issue arises we will have the power to carry out a full investigation.
"And now, with our new powers, we will be able, where appropriate, to suspend or remove an individual from a senior position in a regulated firm."
The tough new regime, brought into law under the Central Bank Act 2010, is expected to come into effect in September.
In an address to students from the Foresight Business Group at Trinity College, the regulator outlined the need for improved standards which he said relates to a banker's ethics, integrity and financial position and also their competence and capability.
Mr Elderfield said he wanted corporate governance in Ireland to be higher than the best international standards.
"Ireland has suffered more than most countries in the financial crisis and needs to get to grips with the homegrown elements of that crisis," he said.
"Stronger remedies are needed here to shake up prevailing corporate governance practices by injecting some fresh blood and setting more exacting standards. This will improve the reputation of Ireland as an international financial centre."
The Central Bank will review the fitness and probity of all existing executive and non-executive directors of banks which have been bailed out and protected by the government.
"I don't underestimate the legal challenges that we might have in using our new powers, but we must be prepared to make difficult judgments on fitness and probity and it is right that we should start with this group," the regulator said.
Officials will also assess directors who plan to be in the job in 2012 including their competence and track record in the run up to the financial crisis.
They also plan to look closely at the actions of bankers who may have contributed to an institution needing taxpayers' money.
Mr Elderfield added: "It is only right that this is something we will consider carefully in assessing the competence of senior managers or board members from banks which required government assistance who wish to re-enter or remain in the industry - and that we send a clear signal on this point."
The Central Bank has asked for interested parties to give their views on the proposals by May 20.