Bank boards heavily populated with ‘old guard’

THE boards of the main banks are still heavily populated with directors on whose watch the institutions came to the brink of collapse.

New figures show that almost two-fifths of the board members in place prior to the September 2008 bank guarantee scheme remain in situ, despite promises of a “clean out” by Government.

In all, 28 of the 74 board positions across the six financial institutions covered by the guarantee are filled by directors who were in place before the crisis erupted.

This equates to 38%, or almost two-fifths, of the six boards in question — AIB, Bank of Ireland, EBS, Irish Life & Permanent, Irish Nationwide and Anglo.

Labour finance spokeswoman Joan Burton said the figures proved that “large numbers of the old guard” are still in place.

“From the very earliest stages of the bank disaster, the universal advice was to change the bank boards to help change the culture that had given rise to the problems. But clearly (Finance Minister) Brian Lenihan has tippy-toed around it,” she said.

“One of the principles of banking reform is to have a clean sweep of the management involved when a collapse happens. That includes the board members.”

The figures came from Mr Lenihan in response to Dáil questions from Ms Burton.

But in his response, Mr Lenihan focused on the changes that had been made rather than the directors who had been left in place.

“Contrary to public perception, a lot of changes at director level at the covered institutions have taken place,” he said.

“The Government has sought to bring certainty to the operation of the Irish financial system by making progressive changes at board level and implementing other measures such as changes in the manner that new director appointments are now made. It is not only a change of personnel that is required but a change of culture,” he added.

“Based on information supplied to me by the six covered institutions, 28 directors representing 38% of those who were in office pre the introduction of the Government guarantee are still in situ. Forty-six cessations by directors from office (62% of aggregate board strength pre-September 2010) have taken place since that time.”

Mr Lenihan’s comments came as Green Party finance spokesman Dan Boyle said neither the minister nor the Government had been notified by Bank of Ireland of its decision to pay a six-figure bonus to one of its senior executives.

Weekend reports put the bonus at €500,000.