Regulator’s role in Anglo share scheme was a ‘sorry story’

Central Bank chief reacts to criticism of ex-watchdog

The Governor of the Central Bank of Ireland, Patrick Honohan, said the regulator's role in the illegal share-buying scheme devised in 2008 to unwind Sean Quinn's stake in Anglo Irish Bank was a "sorry story".

The Governor was reacting to criticisms aimed at the regulator by Judge Martin Nolan yesterday in relation to the so-called Project Maple deal.

“[There is ] nothing that we would want to disagree with what the judge has said,” Mr Honohan said at the launch of the bank’s annual report.

Judge Nolan said it seemed “incredible” that “red lights didn’t go off somewhere in the regulator’s office”, in relation to the share scheme.


“This is something that is behind us but of course the financial crisis is not behind us,” Mr Honohan said. “It has had a long period of consequences. The regulatory actions that happened in the past are something you wouldn’t expect to see today.”

He said all of the actions related to a “regulator of the past”.

In relation to a proposed banking enquiry to investigatge the collapse of the financial sector in 2008, Mr Honohan said it would be a “good idea and a necessary part of the process ...of restoring additional confidence” to the financial system here.

Mr Honohan declined to comment on whether he thought the Central Bank might face civil litigation arising from its role in the Anglo share buying scheme, or whether there should be some clawback of the payments made on retirement to Pat Neary, the then financial regulator. “It’s not for me to get into that,” he said.

Separately, Mr Honohan has cautioned that the Government should continue to keep a tight rein on the public finances “to ensure a more durable recovery” in the economy.

“The need for the public finances to remain on course for the announced path of fiscal consolidation is intensified by the [EU-IMF bailout] programme exit: there is no room for any doubt on this score to arise,” the Governor said in the bank’s annual report, which was published today.

“Financial markets are right to assume that a disciplined approach will be maintained; it would be folly to allow any other supposition to gather credence.”

Mr Honohan noted that debt levels in Ireland, in both the public and private sectors, “remain elevated” and “continue to pose a significant test for all policymakers”.

The report shows that the Central Bank recorded a surplus of €1.5 billion in 2013, of which €1.21 billion will be paid to the exchequer. The remittance to the State is up €65 million on 2012.

The bank imposed 16 fines last year for regulatory breaches, totalling €6.35 million.

In relation to the liquidation of Irish Bank Resolution Corporation in February 2013, the report details payments made to eligible depositors under the deposit guarantee scheme operated by the State. Payments were made to 1,181 depositors, with a total value of €23.1 million up to the end of last December.

The report shows that the Governor Honohan gifted €60,186 of his salary back to the State last year, to leave him with net remuneration of €205,000.

Matthew Elderfield, the former head of financial regulation who left the bank in October last year to return to the UK, was paid €258,016 in 2013 while his successor Cyril Roux, who assumed his post on October 1st, was paid €77,500.

Ciarán Hancock

Ciarán Hancock

Ciarán Hancock is Business Editor of The Irish Times