INBS hid lend­ing restric­tions, says Fin­gle­ton

Im­por­tant that de­ci­sion kept con­fi­den­tial, for­mer man­ag­ing di­rec­tor tells in­quiry

The Irish Times - Business - - BUSINESS NEWS - JOE BREN­NAN

An Ir­ish Na­tion­wide Build­ing So­ci­ety (INBS) board de­ci­sion in late 2007 to se­verely re­strict lend­ing was hid­den from branch man­agers, be­cause the lender wanted to re­as­sure staff as the prop­erty mar­ket was slow­ing and banks over­seas were com­ing un­der pres­sure.

“It was very im­por­tant that that in­for­ma­tion would be con­fined,” INBS’s for­mer long-time man­ag­ing di­rec­tor, Michael Fin­gle­ton, told an in­quiry into al­leged reg­u­la­tory breaches at the failed lender on Thursday.

While INBS all but de­cided to stop lend­ing at the end of 2007 to con­cen­trate on shoring up its liq­uid­ity and re­cov­er­ing loans out to de­vel­op­ers, it con­tin­ued to is­sue some home loans “as a pol­icy to re­as­sure our branch man­agers that there was no change in our so­ci­ety”.

Mr Fin­gle­ton in­di­cated that it was im­por­tant the de­ci­sion be keep con­fi­den­tial as some over­seas lenders were ex­pe­ri­enc­ing strains at the time.

Mr Fin­gle­ton was speak­ing as he cross-ex­am­ined a wit­ness at the in­quiry, which was set up by the Cen­tral Bank in 2015 and where pub­lic hear­ings be­gan last De­cem­ber.

Rep­re­sent­ing him­self

The 80-year-old is rep­re­sent­ing him­self as he and three other for­mer ex­ec­u­tives are sub­ject to an in­ves­ti­ga­tion into whether they par­tic­i­pated in the com­mis­sion­ing of a se­ries of “cer­tain pre­scribed con­tra­ven­tions” be­tween Au­gust 2004 and Septem­ber 2008.

The other men sub­ject to the in­quiry are INBS’s for­mer fi­nance di­rec­tor John Stan­ley Pur­cell, its one-time com­mer­cial lend­ing man­ager Tom Mc­Me­namin, and Gary McCol­lum, who once led the so­ci­ety’s UK lend­ing ac­tiv­i­ties from Belfast.

Credit com­mit­tee

The first phase of the in­quiry is con­cerned with the func­tion­ing of the credit com­mit­tee of the now-de­funct INBS, which col­lapsed dur­ing the fi­nan­cial cri­sis and re­quired a €5.4 bil­lion tax­payer bailout.

Thursday’s wit­ness be­fore the in­quiry was Alan Deer­ing, a for­mer com­mer­cial prop­erty lender at INBS, who at­tended credit com­mit­tee meet­ings from 2005 be­fore be­com­ing a com­mit­tee mem­ber be­tween late 2007 and the end of 2008.

Mr Deer­ing said that the busy work­load of the com­mit­tee as­sess­ing credit ap­pli­ca­tions be­fore the late 2007 lend­ing restric­tions meant that it had very lit­tle ca­pac­ity to fol­low up on the per­for­mance of loans af­ter they were granted. How­ever, he said that bor­row­ers’ credit his­to­ries were as­sessed by the credit com­mit­tee when they re­turned to the so­ci­ety with fur­ther loan ap­pli­ca­tions.

Mr Deer­ing said he was never in­formed about con­cerns raised by the Cen­tral Bank to INBS in 2006 and 2007 about there be­ing no ev­i­dence of the com­mit­tee re­view­ing cases of large com­mer­cial loan ar­rears, ex­po­sures to spe­cific sec­tors or cus­tomers, or is­sues raised by in­ter­nal au­dits, out­side ad­vis­ers or reg­u­la­tors.

Newspapers in English

Newspapers from Ireland

© PressReader. All rights reserved.