Wednesday, 20 April 2011

Irish Banking Crisis Inquest - dumbstruck...

As I suspected, the inquest into the emergence of the banking crisis in Ireland made quite astonishing reading, and is teeming with jaw-dropping examples of dire governance that one would struggle to believe happened in this generation (indeed some the exponents are still on the boards discussed!).

I have picked out some of the most prominent areas from the perspective of governance code divergence or professional incompetence;
  • Anglo promoted CEO to the Chair
  • Anglo FD took over CRO responsibilities in 2007
  • Irish Nationwide MD assumed delegated powers from the Board in 1997 for pretty much everything, and took direct lines of reporting from most functions (including key control functions). There was also no formal risk management function
  • Regulator had to beg for Irish Nationwide to produce Terms of Reference for sub-committees
  • Banks blamed Basel II preparation for taking away their best risk staff for project work (quick warning lads - Solvency II is doing this right now for the insurance industry!)
  • Risk function at Anglo criticised for not interrogating the available data (which was complete), as well as not having the conviction to prevent credit excesses
  • Regulatory findings letters were evidently not tabled at Risk and Compliance Committee meetings at Anglo
  • Perhaps the biggest rollocking in the report is reserved for the Internal Audit function at Irish Nationwide (point 2.10.3) - it is hard to believe that the litany of unprofessionalism noted here resulted in some external consultancy work rather than multiple rolling heads.
  • Regulator was unwilling to engage in a process of "intrusive verification", though I believe they are making up for it now!
  • Regulator's view that it was understaffed at the time appears to conflict with the report writers - "this would not explain why available information was not acted upon"
It isn't difficult to think of these matters, the impact they have had on an amazing people, and be fortified the next time an executive chews your ear off for being a party pooper...

No comments:

Post a Comment