Anglo chief: Bank system repair critical

IRISH banks should be run by new people, and not those in charge during the banking crisis, in order to rebuild public confidence, Anglo Irish Bank chief executive Mike Aynsley has said.

Anglo is in the midst of merging with Irish Nationwide Building Society, to form the Irish Bank Resolution Corporation — a joint wind-down company. Anglo will be wound-down within the next decade.

Addressing yesterday’s Leinster Society of Chartered Accountants lunch in Dublin, Mr Aynsley said the Irish banking system is still broken and its repair is “absolutely critical” to a return to national economic prosperity.

“There’s still a long way to go and it will take time. But you can’t take a half measure approach in rebuilding the system. It’s not just a question of re-capitalising the banks, but also adjusting cultures and leadership within the banks,” he said.

While he stressed he was not passing judgement on any specific individuals, Mr Aynsley said: “If you’re to rebuild the confidence of the public, you have to do it through new people [at the helm of the banks] who haven’t been involved previously during the crisis. A banking system has to be capable of supporting the underlying economy which it serves.”

Mr Aynsley also said that the Government’s two-pillar banking strategy can be a short-term solution, but may not be enough for the longer-term. However, he said it would be unrealistic to hope for the emergence of a credible “third force” in the industry at this time.

“A process has been started to put an important foundation in place for the banking system and that’s crucial.”

He said Anglo has de-leveraged its asset book value to €16 billion and is working on lowering that to zero.

“We’re very happy with the progress made so far.”

He confirmed that the sale of the bank’s US loan book should be concluded within the next couple of weeks. He said that about €5bn of Anglo’s loan book is regarded as healthy.

“We’ll continue to work at maximising as much value of the portfolio, while de-leveraging as quickly as we can and we’ll give back as much money [to the Irish taxpayer] as we can.”

In that regard, he said that Anglo’s current management would continue to pursue people who owe the bank money — including former directors, such as David Drumm.