Regulator: 16 banks misreported €18.8m in loans

Sixteen banks wrongly reported €18.8m worth of loans-to-directors, their friends, family and associates, an alarming review by the financial watchdog revealed today.

One institution lent €11.3m to a director’s associate and later failed to disclose it to the Financial Regulator.

Another unnamed lender understated the size of a loan by €100,000 while another left out two small loans of less than €16,000 from its report.

The Regulator warned it will go after banks breaking the rules with maximum penalties including fines of up to €5m for the institutions and up to €500,000 and disqualification for individuals.

“The Financial Regulator views these omissions and inaccuracies very seriously and will be following up on these matters with the institutions concerned,” the watchdog said.

The inspection of monies to senior bankers, their relatives, associates and linked businesses was prompted after the scandal over hidden loans-to-directors at Anglo-Irish Bank, including €87m to former chief Sean FitzPatrick.

Despite the handful of failings identified in the latest inspections, the Regulator said Allied Irish Banks, Bank of Ireland, EBS, Irish Nationwide, Irish Life & Permanent and Postbank had their books in order.

According to the report, 12 Bank of Ireland directors had loans, eight AIB directors, three in EBS and Irish Nationwide and two at Irish Life.

Banks had €26m in loans to board members last year with the money used for commercial deals, mortgages, credit cards, overdrafts, cars and share deals.

The Regulator said it cannot identify which banks failed to disclose loans until sanctions are imposed.

Its report found:

:: No evidence of hidden loans.

:: No loans were impaired or behind in payments.

:: All met fell below the limit of 2% of lenders’ funds.

:: No loans-to-directors given with special or preferential deals.

The Regulator also said it had introduced strict new rules on reporting these internal loans in bank’s annual audits in order to avoid a repeat of the Anglo debacle.

Borrowers must detail the amount owed at the beginning and end of the period covered by the financial statements, the maximum liability, any unpaid interest and provisions if the loan cannot be repaid.

Shareholders will also be allowed to inspect details of the loans.