Central Bank code of practice for director loans

THE Central Bank has introduced a new code of practice for directors’ loans aimed at stamping out the kinds of policies that came to light at Anglo Irish Bank, at the time of its nationalisation early last year.

Back then, it was discovered that the controversial bank had nearly €180 million in outstanding loans to its own directors; with its former chairman and chief executive Sean FitzPatrick having amassed loans of over €120m across an eight-year period. Anglo’s former chief executive, David Drumm, currently owes the bank around €8m.

The new code will effectively make such practices far more transparent and, significantly, governs that any loan to a company director which exceeds €1m, in value, cannot be passed without being approved by the Central Bank.