Judge slams ‘heedless’ bank lending

A High Court judge has stressed the need for urgent reform and regulation of banks and the markets following “heedless lending behaviour” that has caused “fathomless damage” to the economy.

“Banks should never be allowed the power to distort a national economy; experience has shown that they cannot be expected to act solely in the national interest,” Mr Justice Peter Charleton said.

It was obvious there must be “guidance, and more” provided to banks as to when to loan money and, “more essentially”, banking must become honest and prudent,” the judge said.

On the basis of expert banking evidence provided to the court, he said financial transactions involving “products” incorporating debt of various kinds or moving through several layers “may need to be made transparent and then controlled”.

This also extended to bank accounting as when the former Anglo Irish Bank was nationalised in Jan 2009, its management estimated its impaired loans at €5bn when it later appeared the correct answer was €35bn.

He made the remarks in a judgment yesterday in which Irish Bank Resolution Corporation — formerly Anglo — sought €10.4m judgment orders against two companies — Cambourne Investments Inc, a British Virgin islands company with a branch registered at Parnell Centre, Parnell Street, Dublin; Century City Ltd, with registered offices at Sheridan IMAX Theatre, Parnell Street, and property developer, Peter Curistan, Hampton Park, Belfast, over loans advanced to purchase several units in Dublin’s Parnell Centre.

While finding those loans were “foolhardy” and made by a bank “intent on lending money without proper analysis”, the judge ruled they were repayable and the bank was entitled to the judgments.