Central Bank may add 350 staff in next two years

STAFF levels at the Central Bank could swell by 350 in the next two years as the body – soon to be amalgamated, with the Financial Regulator, into the new Central Bank Commission – moves to build a more effective supervisory regime.

The body admits, in its paper outlining its new approach to financial supervision, that its resources for supervision were previously “far below what was required” and now plans to recruit 150 staff before the end of this year; bringing employee numbers to 1,300.

There is also scope for a further 150-200 jobs over the next two years, with the ultimate aim to have “a minimum ratio” of 10 supervisory staff per firm for major institutions.

“We plan to improve specialist expertise by recruiting staff with direct business/banking experience; credit, liquidity, treasury, market and operation risk experts and establish a risk experts panel,” it said in yesterday’s report.

Central Bank head Patrick Honohan’s recent report into the banking downfall has already stated that “effective bank supervision simply cannot be performed with the thin staffing that was applied to frontline operations of the Financial Regulator”.

In its new blueprint for banking supervision, the Central Bank said that although the Irish banks “borrowed imprudently and lent recklessly” over the past decade, the banks – though possibly unpopular – “remain essential to the functioning of the economy”.

“The longer-term challenge is to make sure that the banks remain a source of strength, rather than a threat, to the economy.”

The new “attentive”, “challenging” and “intrusive” stance on supervision will see the Central Bank have more regular and closer contact with the banks and more insight into their decision making processes.

It is also calling for a new central credit register, as a check of banks’ exposure to loans.

“We have sought to make sure our recommendations create incentives for good behaviour and discourage bad behaviour,” said the bank’s assistant director general for financial institutions, Jonathan McMahon.

“The fixed cost of being regulated will be higher because we will be more intrusive. The variable cost – measured in time and money – will reflect how individual banks conduct themselves,” he added.