Noonan pledges banking measures

Minister for Finance Michael Noonan has pledged a number of reforms for bank boards and management after a report into the banking crisis heavily criticised Irish financial institutions.

Mr Noonan plans to clear the boards of its banks of members appointed before the country's financial crisis first struck in September 2008.

"I'm not saying that they are personally culpable. I am simply saying that the crisis occurred on their watch and it's normal that if the crisis occurs on your watch that you depart subsequently," he told a news conference.

"I would expect this succession to be substantially completed by early 2012, and will use my powers as shareholder to affect such changes if necessary."

Mr Noonan's comments suggests Bank of Ireland chief executive Richie Boucher, the most high profile veteran of the crisis still in situ, will have to depart.

However, he declined to comment specifically on Mr Boucher, who was appointed to the board of at the bank in 2006 and has been chief executive for two years.

A spokeswoman for the Bank of Ireland declined to comment on Mr Boucher's future and said the lender was studying the findings of the report by Finnish expert Peter Nyberg.

In a statement this evening, the bank said it would be providing a 'comprehensive' board renewal report to Mr Noonan and to the National Treasury Management Agency (NTMA).

"The bank will study the findings and recommendations carefully and will address them as they apply to the bank," it said.

It added that a number of 'important steps' had been taken over the past two years to improve governance and risk management.

Allied Irish Banks, which is currently searching for a new chief executive and hired former HSBC banker David Hodgkinson last year as executive chairman, said in a statement it will announce further management changes shortly.

It added that its three remaining non-executive directors appointed before 2008 would not seek re-election this year.

EBS Building Society, set to be merged with AIB, appointed Fergus Murphy as chief executive in January 2008.

Irish Life & Permanent's chief executive Kevin Murphy has been a board member since 1999. EBS and Irish Life & Permanent declined to comment.

Mr Noonan also said the Dáil will debate the report tomorrow. In it, Mr Nyberg criticised the “herd mentality” that saw other financial institutions copy the lending policies of Anglo Irish Bank.

His report found that while the speed and severity of the crisis was exacerbated by global events, the main reason was the "unhindered expansion of the property bubble financed by [Irish] banks using wholesale market funding".

The report also criticised the financial regulator, who failed to provide adequate warnings about the risks of a bubble, and the Department of Finance. It concludes there was a lack of critical debate across Irish society about the scale and sustainability of the State's economic growth and the property boom.

Responding, Mr Noonan said the chairman of each institution will be asked to provide a board renewal plan to the Department of Finance and to NTMA.

The chairmen will also be asked for a plan to renew senior management at Irish banks.

Mr Noonan said it was "essential" bank boards continued to have independent non-executive directors and added he planned to nominate suitably qualified members.

"This Government has already brought about a radical restructuring of the banks so as they can support economic growth and jobs.

“Unfortunately, as we have seen in the Report of the Commission and other issues today, there remain legacy issues in the banks that this Government must draw a line under," Mr Noonan said.