Wednesday 17 January 2018

Elderfield 'still hasn't got enough staff' after crisis

Financial Regulator
Matthew Elderfield. Photo: Tom Burke
Financial Regulator Matthew Elderfield. Photo: Tom Burke
Laura Noonan

Laura Noonan

TWO years after the banking collapse, the Financial Regulator's enforcement team is still "critically under-resourced" with only a third of the staff it needs.

Financial Regulator Matthew Elderfield made the admission yesterday at a wide-ranging appearance before the Joint Oireachtas Committee.

He also weighed into the hot debate over how Anglo's senior debt holders could be dealt with, saying the Government had the "option" of asking those bondholders to take a voluntary write-down.

And Mr Elderfield hinted that he was preparing to "adjust" controversial proposals on the boardroom line-ups of banks' and insurers' subsidiary company.

On the topic of enforcement, Mr Elderfield said he had "quite a long pipeline" of cases.

"To actually land more enforcement cases we need. . . more resources," he said, pointing out that the regulator here had about a third of the enforcement resources of its international peers.

Some 24 staff are working in enforcement, but the regulator wants to expand this to 60. Mr Elderfield insisted that the Government had not refused to give him more resources.

The request for more staff will be put before the regulator's board next week and will then be referred on to the Department of Finance, he said.

Asked why the agency was still understaffed, Mr Elderfield pointed out that he had already done "one chunk" of recruitment since he took office nine months ago, with about 120 hired.

"It's clear we still have some holes," he added. "There have been some enforcement cases in the past. . . they tend to focus on smaller brokers, I think it's important that we are able to take on some bigger fish."

Mr Elderfield also addressed the issue of how to deal with Anglo's senior debt holders, pointing out that a "liability management exercise" could be agreed by consent.

He stopped short of calling on the Government to go down that route but said he had given advice on the topic. "My advice to the [Finance] Minister

is something I should keep private," he said, speaking after the meeting.

Earlier, the watchdog offered a glimmer of hope to ISFC insurers and banks that reacted with despair at recent corporate governance proposals on the composition of their boards.

The financials lobbed in a host of objections to proposals that would have mandated an independent chairman for all of their subsidiary boards.

"We're looking at that [the subsidiary issues] and I think we'll be able to make some adjustment," he said.

He insisted, however, that the regulator would "hang firm" on proposals to restrict individuals to holding three directorships, having rejected the "gene pool" arguments made by institutions.

"I don't buy that," he said. "I think we need to broaden the gene pool."

On the topic of AIBs, which has lost four directors in the last week after the bank's effective descent into nationalisation, Mr Elderfield said there was a need to "freshen up" the bank's board.

The regulator also re-iterated his support for a Special Resolution Regime that would enable the regulator to step in at the early stage of a bank's collapse and seek to mitigate the damage.

Other topics featured included the role of auditors in the financial collapse, with Mr Elderfield pointing to the need for "more scepticism" from the profession, and the likelihood of a long road to recovery for Ireland's banks.



Irish Independent

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