Irish Nationwide may need more funds

IRISH Nationwide Building Society, currently in the process of transferring over €8.7bn in bad loans to NAMA, could need further Government funding to shore up its depleted capital base.

Chairman of the nationalised lender Danny Kitchen told shareholders at yesterday’s AGM that if losses this year are worse than projected the society will need additional funding on top of the €2.7bn already pledged by the Government back in March. Mr Kitchen said the losses sustained last year were truly shocking.

Brendan Burgess, a long-term critic of the society, said it could need a further €2bn top-up depending on the scale of the total discount imposed on the loans.

The 2009 figures show the value of the loans being transferred at €5.7bn against €8.72bn on the group’s books. The impairment charge of just over 30% implied in page 65 of the accounts for last year doesn’t stack up, he said.

“I can’t see any argument at all for keeping the society going in the light of the extra funding required,” he said.

With the society’s loan books thought to be in a worse state than Anglo Irish Bank, it was highly unlikely that provisions made in last year’s accounts reflect anything like the discount facing the group on the €8.7bn loans transferring across, Mr Burgess said as he left the group’s AGM at the RDS in Dublin.

During the meeting he posed a number of questions and asked the auditor, Jonathan Lew, if in recent years auditors encountered such deficiencies.

Mr Lew refused to confirm this, but said in the recent years reports had been done on the lending practices and details of these findings were passed to the board and the regulator.

Mr Burgess said he could not understand why no action was taken by them, but Mr Kitchen said it would have been a matter for the board, dominated by Mr Fingleton, at the time to act on the findings.

It emerged the auditors were paid €300,000 last year in fees and that KPMG has been in place as auditors of the company since 1974.

Angry shareholders demanded a poll when the auditors came up for reappointment, but it was defeated roundly.

The ongoing saga of €1m bonus paid to former boss Mr Fingleton was also raised. Mr Kitchen said the new board got legal advice “from two different sources” who said he has no case to answer.

On the society’s future, Mr Kitchen ruled out a merger with the EBS.

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