Former INBS executives did not abide by lender’s guidelines, inquiry told

Society’s former MD Michael Fingleton cross-examines lender’s one-time head of internal audit Killian McMahon

Experts found that former Irish Nationwide Building Society (INBS) executives charged with overseeing its credit policies failed to abide by the lender's own guidelines, an inquiry into its collapse heard.

The society's former managing director, Michael Fingleton, cross-examined the lender's one-time head of internal audit, Killian McMahon, at the ongoing Central Bank investigation into the society's failure on Friday.

The former building society boss highlighted several reports by accountants Deloitte from the period 2006 to 2008 which stated that the credit committee, a group of executives responsible for key decisions on lending, did not fully adhere to its own terms of reference.

These were to “consider and approve or decline all commercial loan applications and residential loans where the society’s exposure is more than €1 million”, and to keep records showing that the committee followed these guidelines.


Mr Fingleton pointed out that Deloitte noted that he himself had increased the amount that the society had agreed to loan to a client. However, he indicated at yesterday’s hearing that there was a perfectly logical reason for that.


He asked Mr McMahon if the former head of audit agreed that Deloitte should have come to him to get that explanation and pointed out that neither the accountants nor internal audit staff did this.

The inquiry also heard that Goldman Sachs prepared reports for INBS, the Central Bank, financial regulator and the Department of Finance in 2008, as the Republic's crisis deepened.

Mr McMahon agreed with Mr Fingleton’s point that INBS was “hugely, hugely challenged” during that period, which was in the lead-up to the State bank guarantee.

Mr Fingleton (80) is representing himself at the inquiry where the Central Bank is inquiring into his actions and those of three others between August 2004 and September 2008.

The others 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.

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

Barry O'Halloran

Barry O'Halloran

Barry O’Halloran covers energy, construction, insolvency, and gaming and betting, among other areas