INBS kept lending despite deepening financial crisis, says former chairman
Building society’s board had put in no-lending policy in 2008, inquiry told
Former INBS chief executive Michael Fingleton and former chairman Michael Walsh: ‘There was a lot of lending in January 2008.’ Photograph: Eric Luke/The Irish Times
He told the Central Bank inquiry into INBS’s €5.4 billion failure that the board decided in December 2007 that it should stop lending as a growing financial crisis seriously threatened the Republic.
However, Mr Walsh confirmed to inquiry chairwoman Marian Shanley that the society continued lending “despite” the board’s policy. “There was a lot of lending in January 2008,” he said.
Earlier in proceedings, he recalled growing increasingly concerned in November and December 2007 at the depth of the global credit crisis.
“It was in mid-December that I became completely concerned that there was going to be a very torrid time from an Irish point of view,” he said.
“We took a sudden policy change that was difficult for people to come on board with at that time.”
Mr Walsh conceded that INBS struggled to implement the policy. He argued that had the crisis abated, the bank would have been “heavily criticised for being unduly prudent”.
The Central Bank is inquiring into the actions of former INBS executives and directors, including its long-serving former chief executive Michael Fingleton.
In February 2018, Mr Walsh settled with the Central Bank. He was fined €20,000 and banned from managing a regulated financial firm for three years.
While he was not involved in day-to-day management, he admitted ultimate responsibility for certain breaches of financial laws.
Retired head of commercial lending Tom McMenamin admitted to multiple breaches of the law. He was fined €23,000 and barred from taking a senior role in a financial firm for 18 years.
The others are one-time finance director John Stanley Purcell and ex-head of UK lending Gary McCollum.