Monday 18 November 2019

Bank board members to go, new culture at top - Regulator reporters

Changes to Ireland’s banking regulatory system will take years to implement but progress is being made, Financial Regulator Mathew Elderfield has revealed.

Rigorous and systematic processes are currently being put in place at the Central Bank to ensure mistakes of the past are not repeated and past failures mean that there has to be a fundamental change of culture at the Central Bank.

Mr Elderfield was speaking in Galway last night where he delivered the annual Paddy Ryan Memorial lecture. He said he expected all directors who sat on bank boards before the 2008 State guarantee to have stepped down by the end of the year.

The Nyberg report, published last month, blamed the ‘herd mentality’ that prevailed in banking and among the regulatory authorities for the consensus based approach to the crisis that discouraged any challenge.

In a damning report published last year Central Bank Governor Patrick Honohan slammed financial regulators for accepting the banks’ “complacent” views that they had no problems as late as 2007. And the Watson Regling report revealed that the Financial Regulator’s role in promoting Ireland as a financial centre worked to the detriment of good banking regulation.

Assessments of financial institutions had to be more risk-based and the Central Bank would have to be more assertive in dealing with any problems, Mr Elderfield said.

He said the role of the Government as shareholders, combined with a willingness on the part of the Central Bank to take action against individuals who may have contributed to the crisis, would see a 'refreshing' of bank boards in the next nine months.

The regulator said new standards governing remuneration to senior bankers would be vigorously implemented so that rewards could be clawed back, if problems emerged after they had been paid out.

Mr Elderfield also said the sale of Quinn Insurance to Liberty Mutual and Anglo Irish Bank last month was a positive step, which provided a path for the business to move forward on.

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