Nationwide no longer expects Fingleton to repay €1m bonus
Irish Nationwide Building Society has given up on any hope of securing a €1m bonus payment made to its former chief executive Michael Fingleton, according to reports.
The news comes as the State prepares to put the final touches to recapitalisation measures on the major banks -- a development which could see the State take effective control of AIB and Bank of Ireland.
Depending on the size of discounts applied to loans being transferred to NAMA, the Government could end up with more than 50pc of the shares in each of the two major banks, analysts said. The State already holds a 25pc stake in each of the two lenders.
The two banks are preparing to transfer property-related loans to NAMA and, depending on the discount applied, the State will see its stake rise from 25pc, possibly over the 50pc mark, analysts said.
The State's share in the banks will rise because by transferring loans to the agency, it will lead to losses on the bank's balance sheet, depleting capital reserves and necessitating further capital injections.
The amount of money the two will need -- over and above the €3.5bn each they have already received -- will only become apparent once the process of transferring loans gets under way next week.
As well as securing capital from the State, the banks can sell assets to raise capital and issue new shares to the public. AIB has assets in the US and Poland which could raise several billion in fresh funds.
While members of Irish Nationwide last week endorsed resolutions which allow the Government to invest between €1.2bn and €2bn of state money into the building society, it has emerged that there is little hope that former chief Michael Fingleton will repay a €1m payment which he received on retiring from his post. He had earlier signalled his intention to repay the loan.
But following a legal opinion the society received, from former justice minister Michael McDowell, which said the payment did not breach the terms of the state guarantee, there appears to be little the society can do to force Mr Fingleton's hand.
It is understood the society no longer expects its former chief to return the €1m payment .
The new chairman, Danny Kitchen, expressed hopes the money would be returned.
Speaking at the society member's meeting last week, he said Mr Fingleton had not yet repaid his €1m bonus but added he continued to hope Mr Fingleton would fulfil the obligation he made to repay it.
EBS members have also voted in favour of changing its rules to enable the Government to invest capital in the society.
At the Irish Nationwide meeting in Dublin, members were highly critical of the organisation's management, which will see 80pc of its loans transferred to NAMA.
Meanwhile, EBS chief executive Fergus Murphy told its members the society's future would be seriously threatened if it did not receive capital.
In reality, members of the two societies, as well as the major banks, had no choice but to vote on recapitalisation measures which will see the State take control.