INBS inquiry asked to drop investigation into former boss Fingleton on health grounds

Michael Fingleton jnr, son of the former managing director, made application

Michael Fingleton jnr, the son of the former managing director of now-defunct Irish Nationwide Building Society (INBS), has asked an inquiry into the lender to terminate its investigation into his father, Michael Fingleton snr, on the grounds of his ill health.

The chairwoman of the inquiry panel, Marian Shanley, said the application would be "dealt with by us over the coming weeks".

Mr Fingleton snr has been unavailable to attend hearings over the past year on health grounds. The inquiry was delayed for a period, before proceeding without him. His son, who is a former executive at INBS, failed to turn up at a scheduled appearance before the inquiry in July and could not be summonsed because he lives in London.

The inquiry, which began public hearings in December 2017, is looking into whether Mr Fingleton snr, former chief financial officer Stan Purcell and INBS's one-time head of UK lending Gary McCollum participated in a series of alleged regulatory breaches between 2004 and 2008.

Mr Purcell maintained to the inquiry on Friday that INBS had what he considered to be a credit risk policy in place on its profit-share loans.

Other witnesses to the inquiry, including Mr McCollum in his evidence on Wednesday, have said there was no policy in place for managing billions in euro in high-risk loans to property developers, in breach of regulatory requirements.

Mr Purcell said that while there was no "standalone policy", a review by accountants KPMG had "recorded our policy" and "put up a mirror to our policy". Mr Purcell said it was "a formal document" and "a lot of work" had gone into it.

Asked if the review had highlighted a strategy rather than a policy, Mr Purcell said he believed “one is a synonym for the other”.

Mr Purcell said he did not have complete oversight of INBS’s commercial loan activities. “In certain things, I was senior management. In relation to lending, I wasn’t,” he said. “I wasn’t assistant managing director.”

Mr Fingleton snr was “the main person with regard to commercial lending”, he added.

When an executive referred to a decision made “at board level”, this was understood to mean Mr Fingleton snr, according to Mr Purcell, who was a member of the INBS board of directors from 1994 until 2010.

High-risk loans

By 2008, INBS had advanced €6.025 billion for commercial property development on condition that the bank shared the profits from the projects involved with the borrowers.

The former chief financial officer conceded that, in retrospect, these profit-share loans were high-risk for INBS, but when they first started, they were “very successful” for the building society.

“They were a successful form of lending in a very competitive environment,” he said. “Later on, things changed.”

He only began to have reservations “possibly around August 2007”. The key concern at that point was that liquidity in the market was beginning to dry up, with the potential for this problem to spiral, not that the loans were thought to be bad loans.

In 2006, INBS’s relationships with property developers were “regarded as a positive thing” that would boost the mooted trade sale of the building society, Mr Purcell said.

He conceded that the financial regulator hadn’t shared this view.

Laura Slattery

Laura Slattery

Laura Slattery is an Irish Times journalist writing about media, advertising and other business topics