Walsh defends Irish Nationwide board


THE FORMER chairman of Irish Nationwide, Michael Walsh, has said anyone who was involved in banking during the crisis was unhappy with what had happened.

He declined to comment on the Government's move to double the State's bailout of Irish Nationwide from €2.7 billion to €5.4 billion last week due to higher than expected losses on property loans.

He also had no comment on his stewardship as chairman of the building society or the management of the institution by former chief executive Michael Fingleton.

Dr Walsh said that it "isn't true" to say Irish Nationwide did not have an effective board.

A former professor of banking and finance at UCD, Dr Walsh joined the board of Irish Nationwide in 2001 and was in charge of the board of the building society over the period when it lent heavily to a small group of property developers and investors.

He resigned as chairman in February 2009 two months after it emerged that the chairman of Anglo Irish Bank, Seán FitzPatrick, had hidden loans of more than €100 million using short-term borrowings from Irish Nationwide over Anglo's year-end accounting date over eight years.

Dr Walsh is a director of International Investment and Underwriting (IIU), the Dublin-based private equity firm owned by financier Dermot Desmond.

The Government took Irish Nationwide into State control earlier this year as the National Asset Management Agency applied heavy discounts on the value of property development loans it was acquiring from the institution.

Minister for Finance Brian Lenihan announced the doubling of Irish Nationwide's bailout as the discount being applied by Nama on the remaining €7.2 billion in loans to be transferred is rising to an expected 75 per cent.

Nama applied a discount of 58 per cent on €700 million in loans moved in the first tranche from Irish Nationwide in March and a discount of 72 per cent on the second tranche of €591 million in July. The society is selling €8.5 billion in loans to Nama, all but €2 billion of its overall loan book.

Arrangements are being made for the sale of the building society or its merger into another credit institution, Mr Lenihan said, and talks between the State, the European Commission and the society were at an advanced stage.

Mr Lenihan said the Government was planning legislation under which subordinated bondholders in Irish Nationwide would share the building society's losses.

This is being challenged by investors, including Millhouse, the investment firm owned by Russian billionaire Roman Abramovich which is threatening legal action.

Mr Lenihan has said he expected investors in subordinated bonds at Irish Nationwide and Anglo Irish Bank to make "a significant contribution" towards the potential €40 billion cost of the two financial institutions.