INBS inquiry hears of conflicting accounts on top borrower reviews

Executives circulated clashing reports on client credit reviews before property crash

An inquiry into Irish Nationwide Building Society (INBS) has heard that executives circulated conflicting accounts internally in 2005 about its key credit committee living up to obligations to assess the performance of its largest borrower clients before the property crash.

Reading from an email, former INBS finance director John Stanley Purcell sent in January 2005 to then group compliance officer, Ita Rogers, Brian O'Moore of the team of legal practitioners assisting the inquiry noted that Ms Rogers was informed at the time that the credit committee had started receiving reviews on top borrowers on a monthly basis.

However, it later transpired that the first credit review report, amounting to an initial 89 cases, was submitted in October that year, to adhere to recommendations from INBS’s then external auditors at KPMG.

The inquiry also heard that Melody van der Berg, personal assistant to INBS's then managing director, Michael Fingleton, had been unsuccessful in her efforts in December 2005 to secure minutes from credit committee member Tom McMenamin proving that the credit reviews were discussed.


Credit committee

At the time, the society was under pressure to respond to a request from regulators on whether Frank Casey, a commercial lending administrator responsible for compiling the credit reviews, was following up on recommendations from the credit committee on foot of discussing his reports.

Mr O’Moore said that no minutes have been produced to show the reviews were even brought up at credit committee meetings or recommendations issued to Mr Casey.

The INBS inquiry, set up in 2015 and where public hearings began last December, is looking into whether Mr Fingleton, former group head of commercial lending Mr McMenamin, Mr Purcell or Gary McCollum, who once headed INBS’s UK lending from a Belfast base, participated in the commissioning of certain regulatory breaches between August 2004 and September 2008.

Taxpayer bailout

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.

Mr O’Moore highlighted how Mr McMenamin wrote on December 21st, 2005, to Ms van der Berg saying that Ms Rogers had been told the credit committee had started discussing credit review reports in October. When Mr O’Moore asked Ms Rogers why she hadn’t sought confirming documentation from committee minutes, the former compliance officer said that function didn’t fall within her remit.

The inquiry continues and is expected to last until the end of 2019.

Joe Brennan

Joe Brennan

Joe Brennan is Markets Correspondent of The Irish Times