The selection of Frenchman Cyril Roux as financial regulator and deputy Central Bank governor in succession to Matthew Elderfield has caught a few people on the hop, although the appointment has received a broad, if cautious, welcome.
Cyril Roux, left, has big boots to fill in the shape of outgoing financial regulator Matthew Elderfield, right.
Mr Roux will head up an organisation with a staff of around 620 — its numbers boosted over the past three-and-a-half years or so by his predecessor.
The appointment will surely meet with the approval of the troika. The question is whether Mr Roux has the political nous to deal with the inevitable fallout from the surge in repossessions coming down the line.
As a graduate of an exclusive Parisian educational institution, Roux is a paid-up member of the country’s elite, well used to its gilded corridors of power. But how will he deal with the sort of stressed people whose views can be heard frequently on the Joe Duffy show?
Embattled Government politicians can be expected to retreat into hiding in the hope that Dame St officials and bankers cop much of the flak.
Ciaran O’Hagan, a senior economist at the Paris-based Société Générale, predicts Mr Roux will be a tough-minded regulator.
Mr O’Hagan said: "A graduate of France’s top engineering school, the École Polytechnique, he was fast-tracked to the French treasury for a career in finance. He still has youth on his side. People like him are generally good at identifying nonsense and don’t put up with it. Mr Roux looked after structured credit operations at Axa investment managers so he is well-versed with complex financial engineering that has got a bad press.
"However, he has seen that such engineering can have a value for the broader economy in ensuring the efficient allocation of financial resources."
According to economic commentator Jim Power, the appointment is to be welcomed. "The loss of Matthew Elderfield could have dealt a serious body blow. In his view, the selection of an outside heavy hitter provides a reputational boost to the country. Appointing an insider at this juncture would have been a retrograde step."
Mr Roux has the intellect to "read himself in quickly" to the brief that awaits him. Mr Power agrees that, not being someone with local ties, he "won’t be got at".
Another analyst, speaking off the record, said Mr Elderfield has left a strong legacy. "You can feel the Central Bank on your shoulder. In terms of his CV, and the optics, this is a very good appointment."
However, it remains to be seen whether the reforms initiated by Mr Elderfield and now carried on by Mr Roux will meet with success. "It will take a couple of years to see whether we are in the space of reshaping the economy in a positive direction," the analyst said.
Last week’s mortgage arrears figures certainly highlight the scale of the challenge.
Mr Roux hails from a society that faces its share of challenges, but is one that avoided the sort of financial bubble that afflicted Ireland.
France does, however, have its share of scandal, much of which can be traced to the close connections between the top political and business classes.
Nicolas Sarkozy, the former president, appears to have narrowly avoided being indicted in connection with an investigation into whether France’s richest woman, 90-year-old Liliane Bettencourt, was duped into handing over large sums towards his 2007 presidential campaign.
Jérôme Cahuzac, the budgets minister, was recently forced out of office following revelations that he had salted away a lot of money in secret Swiss bank accounts.
Illness has ensured that another former president, Jacques Chirac, avoided indictment on corruption charges.
Twenty years ago the system was rocked by the collapse of the leading bank Credit Lyonnais and its subsequent rescue by the state. The bank splashed out billions on everything from a Hollywood film studio, MGM, to a large stake in the media empire run by infamous rogue Bob Maxwell.
The new regulator must now deal with the continuing fallout from a banking collapse of an altogether different scale.
Recently, the regulator’s deputy, Fiona Muldoon, seen as a candidate for the job now to be occupied by Mr Roux, addressed the MacGill summer school in Donegal, outlining the challenges ahead.
In her view, "Ireland is set for a turbulent period over the next three months".
"Some will unfortunately lose their home, some will need to enter into insolvency proceedings," she predicted. The banks are embarking on the task of dealing with customers one by one.
The number of ‘don’t pays’ in strategic delinquency as opposed to ‘can’t pays’ in enforced default, is growing, helping to fuel the ongoing surge on bad and doubtful debts. It is not a pretty picture.
Ms Muldoon insisted that a functioning banking sector can be restored by 2016 — it is a tall order but the alternative does not bear thinking about.
Mr Roux will have to walk the fine line between severity and softness as he sets about restoring the system. His tasks, particularly in relation to the IFSC, remain considerable. He cannot be seen to strangle that golden egg-bearing goose, but nor can he allow any slippage in standards.
He must also supervise a complex stress-testing exercise that will determine whether the taxpayer should stump up yet more money for the sector.
Finally, he must also manage relationships with our European partners.
Above all, Mr Roux must avoid being viewed as the troika’s man, sent over to preside on a final stage of financial colonialism at the expense of a hard-pressed citizenry.