Thursday 16 August 2018

Central Bank acts to purge number of superdirectors

Despite slashing numbers, there are still four individuals who hold a total of 365 directorships, says John Reynolds

Ireland has the third biggest shadow banking operation in the eurozone, with about €2.9 trillion of assets, according to the ECB
Ireland has the third biggest shadow banking operation in the eurozone, with about €2.9 trillion of assets, according to the ECB

John Reynolds

The Central Bank has hauled in a number of 'superdirectors' of Dublin-registered international investment funds for meetings, in order to challenge them about the number of directorships they hold, the Sunday Independent has learned.

The move comes after the Bank put them on notice last June, revealing publicly that it had identified 13 individuals who between them had 652 directorships.

Most fund directors would be paid an annual fee of about €20,000 - meaning that some 'superdirectors' may have earned up to €1m a year. There are about 6,000 funds domiciled here and more than 2,000 Irish people work as fund directors.

One reason for the Bank's move is because, in some cases, individuals were holding down full-time jobs as lawyers or accountants as well as working in their directorship roles.

This raised concerns about their ability to scrutinise the risks taken on by the funds in question and also about the time available to them to properly fulfil their responsibilities, in the interests of the funds' shareholders - typically pension funds and institutional fund managers - as required by the funds themselves, which are typically based in London or New York.

Analysis of filings to the regulator and company records indicates that two directors who previously held about 180 directorships between them now only have 23.

While a number of others appear to have reduced the amount of directorships that they have, company records indicate there are still four individuals who, between them, have 365 directorships. However, some of those may relate to management companies and sub-funds or to funds in the process of being wound up but whose filings had yet to be made to reflect this, sources suggested.

"The Central Bank has engaged and met with a number of directors in relation to the directorships they hold," a Central Bank spokeswoman said.

"As a result, there has been a reduction in both the individual commitments made by the directors involved and the number of directors with an extensive level of aggregate professional time commitments. In some cases, directors did not take up additional directorships due to our intervention.

"Director time commitments are assessed on a case-by-case basis, taking into account a range of different factors including the complexity of the investment objective and strategies, specific risk factors, the number of sub-funds and the nature of the portfolios involved.

"The Bank does not comment on individual cases and will not be publishing details of the number of supervisory engagements undertaken," a spokeswoman added.

The move is also part of a wider global focus on investment funds and vehicles, aiming to bring the so-called 'shadow banking' system under closer regulatory scrutiny, led by the European Systemic Risk Board and the Financial Stability Board.

Ireland has the third biggest shadow ­banking operation in the eurozone, with about €2.9 trillion of assets, according to the ECB.

Investment funds and companies used to repackage debt account for most of this.

Sunday Indo Business

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