Irish Life & Permanent (IL&P) is revamping its corporate governance structure following the multi-billion euro loans controversy with Anglo Irish Bank.
IL&P chairperson Gillian Bowler said the transactions breached the high standards expected at the firm but sweeping new controls will ensure such behaviour won’t happen again.
In the scandal, IL&P transferred more than €7bn to Anglo Irish Bank during 2008 in a bid to shore up its balance sheet amid turmoil in the international financial markets.
The controversy resulted in the resignation of CEO Denis Casey and two other senior executives in February.
Ms Bowler told today’s IL&P AGM in Dublin: “The Anglo transactions represented a serious breach of the high standards to which this company and our staff aspire.”
“The fact that they could have occurred without any reference to the board was the biggest shock and disappointment and we’ve taken steps that will prevent a recurrence.”
She added: “We are committed to managing this business by the highest ethical standards and will take whatever steps are necessary to achieve that.”
IL&P has accepted recommendations from international consultants Oliver Wyman which reviewed the firm’s corporate governance framework.
A new head of group risk will be appointed and will sit on the executive management team.
The functions of the internal audit and risk management teams will also be separated from the finance department.
A spokesman added: “IL&P is committed to reviewing and strengthening the risk and control culture throughout the organisation.”
“The group has taken steps to improve management communication and reporting to the board and improve board oversight of risk and control issues.”
In a trading update issued ahead of the AGM in the RDS, IL&P said 2.6% of its loans were over 90 days in arrears at the end of March.
New residential mortgage lending is also down about 80% on 2008 levels, executives said.
“Overall the bank’s loan book is expected to decline modestly through 2009,” said a management statement.
IL&P said rising unemployment has stemmed cash-flow levels and falling asset values have severely dented investor confidence.
But it added: “There are however positive signs that the adjustments necessary for economic recovery in Ireland are taking place – in labour competitiveness, in the housing market, in consumer prices and in the public finances.”
IL&P said it expects to appoint a new CEO in coming months.