Saturday 26 May 2018

Bank directors face removal if they fail to deliver on trackers

Finance Minister Paschal Donohoe Pic: Steve Humphreys
Finance Minister Paschal Donohoe Pic: Steve Humphreys
Cormac McQuinn

Cormac McQuinn

Pascal Donohoe has warned he is prepared to remove directors from bank boards if commitments to resolve the tracker mortgage scandal aren't delivered on.

The Finance Minister said it is just one of the actions he will take if the banks do not act. Mr Donohoe said the move is among those open to him if he decides to act as an "activist shareholder" in banks that are part-owned by the State.

Mr Donohoe hauled the bosses of the main banks into the Department of Finance last week to admonish them on the handling of tracker mortgages. As many as 20,000 householders may have been affected, losing money and in some cases their homes, after banks wrongfully took customers off tracker schemes.

The Central Bank is probing the issue, and after their meeting with Mr Donohoe the banks promised to repay and compensate the majority of the 13,000 affected customers identified so far by Christmas.

Read More: BoI moves to lower fixed-rate interest on mortgages

Among the warnings delivered by the Government to bank chiefs is that the bank levy could be hiked. It has also been suggested that discussions won't happen on lifting the €500,000 salary cap unless they live up to their commitments on tracker mortgages.

Mr Donohoe last night confirmed that he may go as far as removing bank directors from boards if the promises that have been made aren't delivered on. He said he wouldn't be in favour of removing entire boards, as directors need to be in place to meet company law requirements.

However, he said he does include action relating to the role of individual directors as part of the options the Government may take as an activist shareholder.

"There are many actions that will be open to me next year if this matter is not resolved, including pay, including the tenure of individual directors, and including my role in relation to corporate resolutions.

"I'm willing to do any, or all, of them if the timeline for actions that have been committed to by the banks, that have been agreed by the Central Bank, are not met," he said.

Meanwhile, Transport Minister Shane Ross said the Independent Alliance would still like to see a criminal investigation into the issue, but its TDs are 100pc behind the Government's approach. Mr Ross said the Alliance would support any measures the minister may take as a shareholder, if he "finds the banks wanting in any way", including removing directors.

Irish Independent

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