Fiona Muldoon, the head of banking and insurance regulation at CBI, made her comments at the University of Limerick yesterday where she addressed a seminar organised by the Kemmy Business School.
In her address Ms Muldoon acknowledged that in order to maintain a strong, active single market, regulation and regulatory structures must change in response to market developments and innovations.
“In my opinion though and having worked in both, [public and private sector] changes to the rules are all very well but real, lasting change and reform will come only with a change in mindset in both public and private sector.
“That is when concepts like value-for-money, efficiency, performance management are as familiar a part of the everyday lexicon of a public sector regulator as ethics, the public good and doing the right thing by the customer are in the culture of the private sector firms that it regulates.
“And indeed when a top job and everything that comes with it also comes with a strong streak of individual accountability. And when challenge and diversity and corporate culture are highly valued and rewarded by senior management and the boards of our banks, our insurance companies and our credit unions, and indeed public sector organisations like ours,” she said.
Banking union and solvency II will bring another chance at getting the framework right, she said.
Stefan Gerlach, deputy governor of the Central Bank, said that had Ireland adopted a “macroprudential policy” it may have stemmed the rise of the bubble and not exposed financial institutions to as much risk.
Mr Gerlach said banks should raise capital from shareholders “because banking is a risky business and having banks holding more capital is sensible. If they don’t have enough capital when they get hit, it’s not pretty and that isn’t fair to the taxpayer”.