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Elderfield MUST be ruthless with this defiant bank

Financial Regulator Matthew Elderfield must face down the challenge from NIB.

When the ECB cut rates, some lenders announced they were cutting theirs.

But most of the larger lenders, including AIB, Bank of Ireland, EBS and Ulster, said nothing.

Now that the gauntlet has been thrown down by NIB raising its rates, Elderfield must accept the challenge.

He lacks the legal powers to force NIB to cut its mortgage rates - but he does possess considerable leverage which he must now be prepared to use ruthlessly.

Just last week NIB announced that it had written off another €632m of bad debts for the first nine months of 2011. This means that it has now written off over a fifth of its total loan book.

Andrew Healy, who has been NIB chief executive since 2005, has presided over this orgy of reckless lending.

Should he be allowed to continue running this bank?

Elderfield should use his powers to determine whether or not he and the other NIB senior executives and directors are up to the job.

The Financial Regulator should also use his powers to tie NIB up in knots. He must insist that every "i" is dotted and "t" crossed.

Make it absolutely impossible for NIB to do business until it reverses its mortgage rate decision.

It is only by making an example of NIB that other, larger lenders will be deterred from also cocking a snook at the Financial Regulator.