Loan books under close scrutiny from Financial Regulator

THE Financial Regulator has confirmed that an examination of the loan books of the six financial institutions that are due to sign up to the Government’s guarantee scheme is already under way.

A spokesperson for the regulator said the audit, which was being carried out by Pricewaterhouse-Coopers, had already commenced in advance of the state’s rescue plan for the banks being announced last month.

The exercise could be completed before the end of October.

Meanwhile, the Financial Regulator also began its recruitment campaign yesterday to hire 20 bank supervisors who will be placed “on site” within the banks and building societies which are expected to avail of the Government’s estimated €500 billion guarantee scheme.

The spokesperson said the guarantee scheme assigned significant additional responsibilities on the Financial Regulator, especially “a greatly intensified level of supervision” of the banking sector.

The existing 50 staff within the regulator’s banking supervision department previously would have only been physically present within retail banks and building societies on an infrequent basis.

However, the new supervisors will be based permanently within the various financial institutions for a minimum two-year period.

The new supervisors will be expected to examine various types of risk within the financial institutions in terms of liquidity and capitalisation.

Although some existing retail bank staff might seek one of the new positions, the spokesperson for the Financial Regulator said steps would be taken to ensure that any successful applicants did not suffer any potential conflict of interest in relation to their previous employment.