Government in threat to oppose bankers’ board seats over scandal
BANK directors face the prospect of their board memberships being opposed by the Government if they don’t deliver on their pledge to compensate the victims of the tracker mortgage scandal.
Finance Minister Paschal Donohoe told the country’s top bankers he would hold them “personally responsible” for resolving the situation that saw thousands of bank customers lose money when they were wrongfully taken off tracker schemes.
His warning came during his meeting with bank bosses earlier this week.
The Government last night rejected criticism that they have stepped back from the issue and are waiting to see whether the banks will deliver on their promise to repay and compensate the majority of affected customers by Christmas.
Among the warnings delivered to bank chiefs is that the bank levy could be hiked and that discussions won’t happen on lifting the €500,000 salary cap unless they live up to their commitments on tracker mortgages.
The Irish Independent has learned that Mr Donohoe also told the bankers they would be held personally responsible for resolving the matter.
Sources said the minister never expressly threatened to vote against re-election of board members at AGMs next year – “but the intent was clear”.
“A week ago we were talking about taxation but the emphasis in the meetings was more personal,” the source said.
“If the Government makes changes to the bank levy that has knock-on effects that will have to be factored in. The State is a shareholder in three of these banks.
“But telling CEOs they are personally responsible is what hit them. That stuff matters to these people. That’s language that has not been used before.”
There is no question of Mr Donohoe (inset) seeking an EGM at any of the banks but he warned that he is prepared to “act as a shareholder”.
“There are things they want to do that require the minister’s consent. They might not get that unless this is fixed.” The source added it will “not be a case of walking away now and following up on this in six weeks”.
“There are on-going contacts with the banks,” they said. Last night, Opposition TDs continued to heap pressure on the Government to do more. Fianna Fáil finance spokesman Michael McGrath argued: “It’s becoming increasingly clear the Government’s intervention didn’t amount to a hill of beans” and they got “nothing new from the banks”.
He pointed out that even with the commitment that most people will be repaid by December, some people will still “spend another Christmas out of pocket by thousands of euro”.
Mr McGrath said the Government might be hoping the heat had been taken out of the issue but warned this wouldn’t happen because “real people have had their lives turned upside down by the banks and they are determined to get justice whatever it takes”.
Labour finance spokeswom- an Joan Burton accused the Government of conducting a “war of words” rather than taking action.
She said the Government must be prepared to use a “big stick” with the banks which had to be “taught a clear lesson that this is going to cost them”.
She suggested an increase in the bank levy and changes to the situation that sees some banks not liable for taxes for 20 years due to the losses they incurred during the crash. She also suggested that the European Central Bank takes a greater oversight role of the banks here.
A Department of Finance spokesperson insisted Mr Donohoe made a “very strong statement” this week and secured apologies as well as a time-line for redress and compensation.
The statement said Mr Donhonoe had described the tracker issue as “a scandal that should never have happened and the banks’ behaviour as disgraceful”. Mr Donohoe was said to be determined to ensure resolution for all those involved.
Junior finance minister Michael D’Arcy last night said that the banks had “a few weeks” to pay back customers in 12,000 out of 13,000 cases and said “that’s hardly a step back”.
He said the ball was in the banks’ court and “we expect the banks to adhere to their agreement end of story”.