Bankers to answer for salaries and practices

THE chief executives of the leading banks will be summoned to an Oireachtas committee hearing to explain how their institutions got into so much trouble.

And they are likely to face awkward questions at the meeting about the massive salaries each of them enjoys.

After the emergency legislation to safeguard six Irish banks was passed yesterday, the cross-party Committee on Finance announced it would question the banks about their lending practices and liquidity problems.

In July, senior executives from four of the banks — AIB, Bank of Ireland, Permanent TSB and Anglo Irish Bank — appeared before the committee, and while acknowledging there were growing liquidity issues, insisted they were “robust and stable”.

Committee members subsequently expressed dissatisfaction with the answers they received, however.

“They went through the exercise, stating there was no problem and that everything was fine. In the meantime, bank shares have been going down, there are concerns and rumours, there are disasters in the US and nobody knows when this will end,” Fine Gael TD Sean Barrett said after the meeting.

Over the summer, the committee discussed the possibility of summoning the group chief executives of the banks in a bid to get more comprehensive answers. This week’s bailout emphasised the need for such a meeting, and yesterday, committee chairman, Fianna Fáil TD Michael Ahern, announced he would summon the banking chiefs to appear in the coming weeks.

“We need to discuss how the banking situation came about and how things changed since our previous meeting,” Mr Ahern said. “We also need to get some assurances and detailed answers from the banks on how they plan to proceed.

“We deserve some straightforward answers. We deserve to know what their plans are going forward, how they plan on managing liquidity and what their plans are for issuing and securing credit.”

Mr Ahern also made clear that the issue of executive pay would be on the agenda. “We will also look to cover other topics such as whether the new economic realities will be reflected in the salaries of the top banking executives,” he said.

Meanwhile, Labour leader Eamon Gilmore has said his party voted against the emergency legislation to safeguard the banks because the Government failed to spell out the extent of the exposure to taxpayers.

He said despite the lengthy debate on the legislation, which stretched over three days, the Government had failed to answer key questions such as how much the banks would pay for the guarantee and the potential cost to the taxpayer.

“The Taoiseach and the minister say, ‘Don’t worry, it won’t cost anything — the banks will pay’. But they cannot tell us how much the banks will pay or even when they will pay. We still don’t know,” Mr Gilmore said.

The Government has pledged to publish details of the scheme, including the costs to the banks, next week.