Return of €1m bonus won’t save Fingleton
IRISH Nationwide boss Michael Fingleton still faces the chop despite giving back his €1m bonus, in what appears to have been a desperate attempt to save his job.
His decision is regarded in government circles as too little, too late, and the pressure on the building society chief executive to resign is still intense.
Mr Fingleton bowed to pressure ahead of a vital report to Finance Minister Brian Lenihan on the management of the building society on Monday.
Government sources said last night that handing back the bonus would not be enough to keep Mr Fingleton at the helm of the society he has run for the past 37 years.
A coalition source said: “Too late. He has to go.”
Another government source said Mr Fingleton’s move would “not work”. He added: “The view of ministers is that giving back the money was right. But it shouldn’t be connected and it won’t have an impact.”
The development came hours after a stormy Bank of Ireland extraordinary general meeting was told that the €3.5bn state bailout may not alone stave off any possible nationalisation of the 226-yearold group.
BoI governor Richard Burrows said government plans to tackle risky loans festering in banks and extend the guarantee scheme would be key to keeping the bank in private hands.
The governor said he “deeply regretted” the collapse in the share price and cancellation of dividends last year.
Meanwhile, Mr Lenihan’s officials were quick to welcome Mr Fingleton’s decision to hand back the money. “The minister notes the return of the bonus and considers it the correct course of action by him,” a spokesman said.
However, the junior coalition partners were more direct in their view of Mr Fingleton’s future and continued to call for his resignation.
Green Party Senator Dan Boyle said the return of the bonus was welcome. “But he still has to deal with the pension money. That has to go back and he has to quit,” he said.
Fine Gael said it was only right that Mr Fingleton return the €1m but he still must resign. FG deputy finance spokesman Kieran O’Donnell said the bonus should never have been paid out in the first place, but the position of the bank boss remained untenable.
“I welcome the fact that the €1m has been given back as it never should have been given out in the first place. However, the matter cannot rest at that,” he said.
And despite returning the controversial bonus, an unrepentant Mr Fingleton continues to insist he is legally entitled to the €1m perk. The spotlight also still remains on his massive €28m pension deal. This is understood to have been severely depleted by the drop in shares, particularly Irish banking shares.
Ironically, the now nationalised Anglo Irish Bank is believed to have made up a substantial part of his pension portfolio.
The two institutions became intertwined recently when it emerged former Anglo chairman Sean FitzPatrick had hidden up to €122m worth of loans from shareholders by temporarily transferring them to Nationwide during key accounting periods.
Last night, government sources indicated that intense behind-the-scenes pressure on the 71-year-old would continue, ahead of the crunch meeting between two state-appointed society directors and Mr Lenihan on Monday.
The controversial bonus was paid out last November, only weeks after the Government introduced the €440bn banking guarantee – bringing his total pay package for last year to €2.3m.
A statement issued on Mr Fingleton’s behalf blamed “a continuing 24-hour media siege on his home” and expressed “concern for the effect (the issue) may have on the society” for his decision to voluntarily return the money.
It also highlighted Mr Lenihan’s comments this week that he was not compelled to give the bonus back, as it had been agreed in advance of the guarantee.
The board had sanctioned payment last April.
“Legal opinion obtained by the society also concludes that Mr Fingleton has full legal entitlement to this payment and that it has nothing to do with the government guarantee scheme,” the statement said.
“It is now very clear that Mr Fingleton’s payment was paid under a valid, binding contract entered into between himself and the society and that he has no obligation to be beholden to any other third parties in this regard,” it said.
Even as pressure mounts on Mr Fingleton, observers claim he will probably have to maintain links with the society for some time, given his relationships with the big property developers that dominate the group’s loan book. Around 80pc of the €12bn loan book is based on commercial property.
Mr Lenihan is understood to have made it clear to Mr Fingleton that keeping the bonus would not be tolerated.