Damning report on Anglo spells end for financial regulator
Charlie Weston Personal Finance Editor
FINANCIAL regulator Patrick Neary resigned last night after a damning report into his handling of secret loans to Anglo Irish Bank directors.
Mr Neary bowed out after a report was presented to the board of the Financial Regulator on the loans scandal at State bailed-out Anglo Irish Bank.
The report heavily criticised the failure of regulatory staff to take action over the hiding of the directors' loans.
The chief executive of the Financial Regulator paid the price after it emerged that officials in the watchdog had known that former Anglo Irish chairman Sean FitzPatrick had kept shareholders in the dark about €87m worth of loans he received from the bank.
Failures
The conclusions of the probe into the secret loans affair, and how it was handled by regulators, was released last night and it catalogues a string of failures by regulators.
The report refers to a "failure to take appropriate and timely actions in relation to what was a serious matter and to escalate the matter to the authority".
The report went on: "In summary, in relation to dealing with the issue of directors' loans in Anglo Irish Bank, the committee concluded that there was a breakdown in terms of internal communications and process and in the regulatory follow-up and response of the organisation."
The report, compiled by a committee of the board of the regulator, also called for a review of staffing in the regulatory body, the speeding up of a strategic review of the organisation and better internal communication.
Mr Neary issued a statement at 9pm last night tendering his resignation, with effect from January 31. But he insisted he was not aware of the loans when they were first discovered by regulators early last year.
His statement said: "So far as I am concerned, I was not advised of any such matters in early 2008 and there has been no oral, written or email escalation of these issues to me or to the Authority over the period until the matter was raised with me by the minister on December 10, 2008."
The probe into the Anglo Irish loans scandal was ordered by Finance Minister Brian Lenihan who discovered the existence of the loans when reading the annual report of Anglo Irish Bank.
Furious
The findings of the report were discussed at a lengthy meeting of the board of the Financial Regulator yesterday afternoon, with Mr Neary dramatically tendering his resignation afterwards.
The board was understood to have been furious to be told that regulatory staff became aware of the loans as far back as January 2008.
Despite knowing about the loans, their existence was kept a secret by staff in the regulator's office.
Now the Financial Regulator is to undergo a root and branch review of how it carried out banking supervision. Father of three Mr Neary had been due to appear before a parliamentary sub-committee on Tuesday, when he was set to be grilled on the matter.
But even before last month's loans controversy at Anglo Irish erupted Mr Neary had been repeatedly called on to resign because of what was seen as his failure to rein in the huge exposure of Irish banks to property loans.
Trinity College, Dublin's, associate professor of finance, Brian Lucey said: "There has been a lot of concern about the regulatory laxity of the Irish system. The perception is one of a regulator asleep at the wheel."
And Sunday Independent business editor Shane Ross was among those who consistently called on Mr Neary to step aside.
The secret loans scandal has now claimed four scalps at the troubled bank.
