Banking bosses face ‘assessments’

TOP bankers will be sacked and prevented from sitting on boards of any other companies if they fail to pass “assessments” on their ability early next year.

Financial Regulator Matthew Elderfield will write to all board members of bailed out banks telling them he will use “new investigative powers” to ensure they “meet required levels of fitness and probity”.

There are still a number of bank board members who have been there since before the bank guarantee or NAMA were announced, and Mr Elderfield said the assessment will include “their competence and track record in the period leading up to the financial crisis”.

The tests will not take place until January 2012 “to allow them to make their plans accordingly”.

If either executive or non-executive board members fail to reach the standards required they will not only be removed but the regulator’s office will “issue notices to prohibit individuals from continuing as directors” with other companies in the future.

The regulator made his comments in London.

He accepted the plans will cause legal challenges, but insisted: “We are prepared to make difficult judgments on fitness and probity and it is right that we should start with this group.”

The culture of boardrooms was criticised by Mr Elderfield who said some companies suffered from over dominant chief executives or ineffective challenges in the boardroom.

Poor governance at banks was “exacerbated by the concentrated nature of corporate life in Ireland, with challenge and awkwardness in the boardroom perhaps blunted by the social constraints of working and living in a small business community and a small country”, he said.

Mr Eldefield also left open the possibility that the Government would try to impose losses on senior bondholders in two defunct lenders — Anglo Irish Bank and Irish Nationwide — if they need more capital.

The ECB is opposed to Ireland hitting senior bondholders with any losses in case it sparks contagion within the eurozone, exacerbating the debt crisis across Europe.

Mr Elderfield said the Government accepted the ECB view that it should not impose losses on senior bondholders in the country’s four remaining lenders but said Anglo Irish Bank and Irish Nationwide were being viewed differently.

Meanwhile, Finance Minister Michael Noonan told the Dáil that the country’s “pillar banks” — Bank of Ireland and AIB/EBS — will have €30bn to lend to Irish businesses over the next three years.

He said deposits held in both banks had “improved significantly” since last Thursday’s bank restructuring and recapitalisation programmes were announced by the Government and the Central Bank.