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Monday 19 March 2018

Controversial finance experts called in to help Permanent TSB

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A BANKING consultancy firm which famously proclaimed Anglo Irish Bank to be the "best bank in the world" has been hired by state-owned Permanent TSB to help reorganise its entire operations, the Irish Independent has learned.

New York-based Oliver Wyman was also named in the US Financial Crisis Inquiry as a secretive consultancy which advised Citibank in 2005 to ramp up its exposure to collateralised debt obligations (CDOs), the complex mortgage securities which caused the world financial crisis.

The decision contributed to losses in excess of $50bn (€39bn) for Citibank and the losses meant the bank required a government bailout.

Sources within PTSB said that around 20 top Wyman financial consultancy staff have been based in Dublin for some time and are looking at all aspects of the bank's operations at the behest of the new British chief executive Jeremy Masding.

The consultants, whose work is likely to cost the Irish taxpayer millions, have until recently been housed at the luxury Four Seasons Hotel in Ballsbridge while carrying out their extensive operations in the bank -- which is effectively owned by the taxpayer.

A PTSB source added that the consultants were "going through every single aspect of our operations with a fine tooth comb. Needless to say it's making a lot of people nervous".

A banking industry insider added: "It seems that almost all senior executives have been told that they will have to reapply for their positions. It has also been made clear that they are unlikely to get the same positions when the reorganisation is finished."

Ray Gordon, a public relations consultant hired to represent Permanent TSB, declined to confirm or deny that Wyman had been hired. However, he released the following statement on behalf of the bank.

"Permanent TSB bank is in the midst of a major transformation programme which will see the creation of a new Permanent TSB bank, a new asset management unit and the creation of a new management structure at the bank. The programme has been reviewed by the troika and by the Department of Finance.

"To assist in this task, new CEO Jeremy Masding and the board have brought in a number of consultants who have the skills and the experience necessary to do this work while the bank proceeds to fill a number of senior management roles.

"Over the coming months our reliance on consultants will decrease as we complete that recruitment process and skill up current staff members to take over these roles."

Wyman is a risk management consultancy with special skills in financial services. In 2007 it described Anglo Irish as the "best bank in the world" at the World Economic Forum in Switzerland and ranked Anglo as a star performer in its proprietary shareholder performance index.

In 2006 the firm stated that Anglo was one of the world's four "supermodels" of banking. In 2008, a year after the Wyman accolade, the Irish State was forced to nationalise Anglo at a cost of billions.

Wyman also verified Bank of Ireland's bad debt levels at €6bn in 2009 -- but the bank exceeded this within months by €1bn. In the same year Wyman was also hired on a previous consultancy operation by PTSB.

The Department of Finance declined to reply to a series of questions from the Irish Independent about Wyman's suitability as a consultant given its record.

"Day-to-day operational matters are a matter for the respective board and management of the institution," a spokesman said.


Quizzed about the cost of staying in the Four Seasons, the department spokesman added: "The minister would expect that any financial institution in receipt of such extensive state support would be mindful of ensuring that operational costs are kept to the minimum and are commensurate with the needs of the business."

PTSB spokesman Ray Gordon said: "The bank is very conscious of the need to secure as much value as possible when negotiating contracts with consultants such as this. While we cannot comment on what arrangements individual consultants have in respect of accommodation in Dublin we do know that a number of different hotels in Dublin are being used by different individuals and, in respect of rates, some of the more high-profile hotels are actually providing the best value."

The day after the Irish Independent raised the accommodation issue, the Wyman group checked out of the Four Seasons.

Oliver Wyman's London office would neither confirm or deny its presence at PTSB in Ireland.

Irish Independent

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