22/03/10

Economic Regulatory Affairs Committee member Sean Sherlock TD has stated that the former Financial Regulator Pat Neary, still has questions to answer over his alleged knowledge of a confidential plan in 2008 to reduce Mr Sean Quinn's shareholding in Anglo Irish bank, as reported in The Sunday Times.

"If Sean Fitzpatrick is being questioned partly on the 'Anglo 10' transactions and if the former Financial Regulator allegedly knew of these transactions, then to my mind, Mr Neary must make himself available again to the Oireachtas Economic Regulatory affairs Committee to answer questions about his supposed knowledge of these transactions.

 

"The former Financial Regulator has been before the committee on at least two occasions and has never once shared this information with the Committee.

 

"The Sunday Times article states: 'Internal documents from the bank show that over a four-month period in 2008, Pat Neary, the then financial regulator, and his staff were kept abreast of the plan to reduce a secret 28% shareholding held by the insurance tycoon'.

 

"The article went on to say: 'Just days before the bank lent €500m to 10 of its most highly-regarded clients to buy almost one-third of the stake controlled by Quinn, David Drumm, Anglo's chief executive, sent an email to a colleague saying that the regulator was "squared".'

 

"On the 13th January 2009, the former Regulator stated to the Committee: 'On the extent to which profits will be adequate to sustain capital levels in Irish banks depends on the level of the provisions arising from those property-related exposures and also on dividend policies. There will be losses on property-related loans and increased provisions and write-offs will be necessary. The potential difficulties in this regard are linked to how the economy unfolds.'

 

"What we can say is that all Irish banks are currently above their regulatory capital requirements, with average regulatory capital ratios of almost 11 per cent, compared with a European required minimum of 8%. In practice, what does this mean? This means the six Irish banks covered by the scheme have a total regulatory capital base of €42 billion. This figure takes account of provisions of €2.1 billion against impaired loans totalling €3.6 billion. (see below for further extract).

 

"It is clear that the Regulator tried to make mugs of the Houses of the Oireachtas and my view is that the office of the regulator deliberately kept vital information from those elected by the people. This will have to be addressed and the Former regulator has walked away from this sorry saga in Irish History, without even as much as a slap on the wrist.

 

"He should be subjected to further scrutiny for his role in this debacle. If the Regulators office is alleging that it was misled it must, with Mr Neary give a full account and make all correspondence available for public scrutiny."

 

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