Most banks have rules on disclosure and avoiding conflicts of interest

BANKERS ARE not prohibited from personal property investment and most banks have rules governing the disclosure of personal interests and the avoidance of conflicts of interest.

The most liberal bank in this regard appears to have been Anglo Irish Bank, whose former chairman Seán FitzPatrick has a large exposure to the bank and what is understood to be a considerable property portfolio.

Prospectuses sent to clients of Anglo’s private banking arm in relation to planned property investments were often circulated to staff who might want to get involved on a personal basis.

Staff were able to borrow funds from the bank to participate in such schemes and other investments.

Anglo had a practice of seeking joint and several guarantees, which meant that if one member of an investment syndicate could not shoulder his or her responsibilities, it was spread among those who could. Also, cross-collateral policies meant loans could be secured across other assets.

In banking, involvement in property development and trading in property with bank customers is considered more problematic than property investment by bankers.

The sharp downturn in the property sector has obviously put great pressure on property investments, creating additional potential stresses for bankers involved in substantial property deals.

The two AIB bankers whose affairs are being inquired into have been involved in substantial dealings over a long period and it seems unlikely their employer did not know of their activities.

A spokesman for AIB said it has policies for its staff concerning the avoidance of conflicts of interest and appropriate conduct concerning confidentiality and personal financial and tax affairs. He had no comment to make as to whether the bank was aware of other senior staff having substantial property interests.

A spokeswoman for the Bank of Ireland said she had no comment when asked whether any of the bank’s senior executives had substantial property dealings in a personal capacity.

When asked the same question, a spokeswoman for Ulster Bank said all staff were “bound by our group code of conduct which addresses matters such as financial prudence”.

A spokesman for Bank of Scotland Ireland said that “as a matter of course, we have processes and procedures in place to help identify potential conflicts of interest, and these processes are reviewed on an ongoing basis”.

A spokesman for Anglo said he had no comment.