Dáil Éireann - Volume 677 - 04 March, 2009
Written Answers. - Banking Sector Regulation.
Deputy Andrew Doyle Deputy Andrew Doyle
Deputy Andrew Doyle asked the Minister for Finance the priorities and objectives for the operation of Anglo Irish Bank which would guide the risk management strategy referred to in his speech on 12 February 2009; if the remuneration package agreed for the bank executives includes a correlation with compliance with all ethics regulations, and financial controls as well as performance; if the management staff of the bank are fully conversant with ethics for public servants, financial regulations and risk management for every trade done in the banks name and its implications for the future bank balance sheet of the bank in order to  change the culture of out of control marketing and sales that has operated in the bank previous to nationalisation; the system of internal auditing that will be established to ensure compliance and accountability for all transactions undertaken; the actions that have been taken to introduce regulatory reform of the banking and financial system; and if there will be an opportunity for public input into proposals for reform. [9084/09]
Deputy Brian Lenihan Deputy Brian Lenihan
Deputy Brian Lenihan: Anglo Irish Bank was taken into public ownership on the 21 January 2009. At that time the board of the bank was reconstituted under the chairmanship of Mr Donal O’Connor. The bank continues to trade as a commercial entity and the board and management of the bank continues to manage the bank on and independent and commercial basis, at arms length from Government.
The Board of the bank is preparing a comprehensive business plan which is being designed to ensure the bank’s long term viability. This report will be submitted to me in the near future. Further the new Board has commenced a full review of governance and internal approval procedures to ensure that the governance and operation of the bank, including the internal audit function, is a model of best practice in this regard. This review is being carried out with the assistance of outside expertise and I am assured by the Board that the recommendations will be fully implemented.
As stated, the bank is being run on an arms length commercial basis and decisions in relation to remuneration of staff, human resource management, and internal audit systems are consequently a matter for the Board. It goes without saying that Anglo Irish Bank, its Board and its staff, are subject to compliance with the relevant legal and regulatory codes. Furthermore, since nationalisation, Anglo-Irish Bank Corporation is a public body for the purposes of the Ethics in Public Office Acts 1995 to 2001 and the relevant employees of the bank are subject to the provisions of these Acts. The Board has been informed of the application of this legislation to the bank.
With regard to executive remuneration, in line with the other covered institutions, the remuneration of directors and senior executive staff at Anglo Irish Bank is being considered by the Covered Institution Oversight Committee (CIROC) established under the Credit Institutions (Financial Support) Scheme 2008. The Scheme provides for controls on executive remuneration in institutions covered by the Guarantee. The Scheme requires each covered institution to prepare and submit a plan to structure the remuneration packages of directors and executives so as to take account of the objectives of the Credit Institution (Financial Support) Act 2008, which include maintaining financial stability in the best interest of the public, and minimising the potential cost to the Exchequer and taxpayers. CIROC has reported to me and I am considering the report.
The Government has stated that it will examine proposals for the management and reduction of risks within financial institutions with respect to specific exposures in land and development, having regard to international developments. As indicated I will be bringing forward proposals on this as a matter of priority. Ongoing work at European Central Bank level and in the EU will inform the process.
Finally, the Deputy will be aware the Government is committed to the introduction of new standards of banking regulation and new standards of corporate governance, which will restore our reputation and move us to the forefront of best international practice. The Minister for Finance be bringing proposals to Government very shortly in relation to the reform of the Central Bank and the supervision and regulatory functions of the Financial Regulator. This will build on best international practice. Any legislative proposals in this regard will be progressed through the Oireachtas in the normal way.
Dáil Éireann 677 Written Answers. Banking Sector Regulation.