Financial Regulator steps down

The Financial Regulator, who faced calls to resign over a secret loans scandal at troubled Anglo Irish Bank, tonight announced he is quitting his post.

The Irish Financial Services Regulatory Authority (IFSRA) confirmed Patrick Neary is to retire on January 31, after only two years leading the watchdog.

The IFSRA said it accepted his decision “with regret”, and wished him well for the future.

Consumer director Mary O'Dea has been appointed as acting chief executive and Mr Neary has agreed to help facilitate a smooth transition.

Mr Neary faced heavy criticism last month after it emerged he may have known for several months about €87m in secret Anglo Irish Bank loans before informing the Finance Minister.

However, a report issued by a IFSRA committee tonight confirmed Mr Neary had no knowledge of the loans because the watchdog's banking supervision department, which was probing the issue, did not inform him due to a breakdown in internal communications.

"There is no suggestion from any party that any communication - verbal or written - on this issue was made to the chief executive in the period to December 2008," the report said.

Mr Neary also said in a statement: "So far as I am concerned, I was not advised of any such matters in early 2008 and there has been no oral, written or email escalation of these issues to me or to the Authority over the period until the matter was raised with me by Finance Minister Brian Lenihan on December 10, 2008."

Mr Neary also said he was standing down to uphold public confidence in the regulatory organisation at a very challenging time for the banking sector.

Anglo Irish chairman Sean Fitzpatrick quit last month after he admitted he temporarily transferred €87m worth of loans to another bank between 2000 and 2007 to hide them from shareholders and the public.

Three executives including chief executive David Drumm, non-executive director Lar Bradshaw and finance director William McAteer later quit the firm over the scandal.

The IFSRA report said the watchdog's banking supervision department first became aware of the secret loans in January 2008 and held meetings with Anglo Irish Bank.

The issue was not properly followed up partly due to poor internal communications and because a letter from Anglo Irish went missing amid the turmoil surrounding the financial markets during 2008.

The watchdog also admitted it did not alert the director of corporate enforcement about the investigation nor did it contact Irish Nationwide, to whom Mr Fitzpatrick had transferred the loans.

IFSRA has undertook to review the quality of communication channels and document filing within its organisation.

The watchdog is still working on an inquiry into directors' loans at all banks covered by the Government guarantee scheme.

Finance minister Brian Lenihan said he will consider the IFSRA's report and ask the Government to consider nominees for the position of chief executive.

Anglo Irish Bank said it will announce a new chief executive for its firm ahead of its EGM next week.

The Green Party welcomed the announcement, saying that the stepping down of Mr Neary was “inevitable”.

Green Party chairman and finance spokesperson Senator Dan Boyle said: “I welcome this evening's announcement by the chief executive of the Irish Financial Services Regulatory Authority Patrick Neary of his intention to retire from his position at the end of this month.

“It is clear that confidence in the Irish financial services sector has been badly eroded by the events of the last six months.

“While much of this is down to practises within the financial institutions themselves, the inability of the regulatory authority to acquire appropriate information pertaining to the stability or otherwise of Irish financial institutions has meant that Mr Neary's stepping down had become inevitable. It is a necessary measure to restore confidence that had been so badly dented.

“There is a need now not only to find a suitable replacement for Mr Neary, but also to strengthen the powers available to the regulatory authority so we can avoid in the future a reoccurrence of the recent events in the Irish financial sector.”