Business Irish

Monday 15 October 2018

Former INBS chair agrees to fine in deal with regulator

Photo: PA
Photo: PA

Gretchen Friemann

The former chairman of Irish Nationwide Building Society (INBS), Michael Walsh, has agreed to pay a fine and accepted sanctions imposed by the Central Bank in relation to his role at the lender that collapsed, costing taxpayers €5.4bn, the Irish Independent has learned.

It is understood the settlement reached with the Central Bank will mean Mr Walsh is excluded from any further involvement in an ongoing regulatory Inquiry into the failed lender, and so ends any risk he could potentially have been landed with a proportion of the Inquiry costs.

The Irish Independent understands that Mr Walsh, aged 66, has agreed to pay a fine and accept regulatory sanctions from the Central Bank.

The scale of the cash fine remains unclear but is thought unlikely to exceed €30,000.

Regulatory sanctions generally mean a restriction from taking any senior roles in financial institutions.

In turn, the settlement resolves all outstanding legal allegations against Dr Walsh, a former professor of banking at UCD, over his role in INBS's €5.4bn collapse.

It is the second time Mr Walsh has settled claims of regulatory breaches at the bailed-out institution.

In 2015 he also agreed a settlement with the liquidators of the Irish Bank Resolution Corporation, into which Anglo Irish and the INBS were subsumed.

That ended a lawsuit over what had been claimed was "wholly unlawful" delegation of powers of by the INBS board to its former chief executive, Michael Fingleton.

The Irish Independent understands an agreement between Mr Walsh and the Central Bank was struck within the past few weeks.

The settlement means the Society's former non-executive chairman, who resigned unexpectedly in February 2009 as the banking crisis was gathering steam, will no longer be a subject of the Central Bank's inquiry into the collapse of INBS.

That clears him from any risk of incurring a potentially colossal legal bill - if costs of the inquiry came to be awarded against those under investigation.

The Central Bank's INBS inquiry into seven so-called suspected prescribed contraventions between August 2004 and September 2008, can award costs against any executives about whom adverse findings are made. It can also impose a range of sanctions, including barring them taking a role at a regulated firm, as well as levy a maximum fine of €500,000.

It is unclear how much the Central Bank has spent on the inquiry so far although it is widely assumed the bill runs into millions and a swift conclusion looks a distant prospect.

Mr Walsh's settlement marks a major turning point for the Inquiry and is likely to prompt questions about its progress so far.

The Central Bank began its investigation into INBS eight years ago. In December the Inquiry proper began its first substantive hearings, almost two-and-a-half years after its launch, into the potential wrongdoing of five members of the management team. At the outset the subjects of the Inquiry were ex-CEO Mr Fingleton, Mr Walsh, the former company secretary, John Stanley Purcell, the former head of commercial lending, Tom McMenamin, and Gary McCollum, who once led INBS's Belfast-based UK arm.

All five denied the allegations against them in opening speeches last year with Mr Fingleton decrying the inquiry as an "artificially trumped up case" and a "cynical exercise seeking scapegoats".

Irish Independent

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