FINANCE MINISTERS TO FOCUS ON RESCUE FUND AND ISSUE OF INHERITED IMPAIRED ASSETS - Euro zone finance ministers meeting in Brussels today will discuss the workings of the euro zone’s rescue fund, the ESM, though any discussion on its application to AIB and Bank of Ireland is likely to be some months away, writes the Irish Times. While the issue of legacy assets was discussed by euro zone finance ministers last month, senior EU sources have indicated the issue has been put on the back burner, and serious consideration of the question of retrospective recapitalisation will not be on the agenda until April at the earliest. With Ireland having achieved a deal on the Anglo Irish promissory notes, attention is now turning to the possibility of achieving debt relief on the Government’s recapitalisation of AIB and Bank of Ireland. Key to this will be whether the two pillar banks qualify for retrospective recapitalisation by the euro zone’s €500 million rescue fund which was set up last September. While the technicalities of the ESM are expected to be discussed at today’s meeting, focus is likely to be on the question of the level of the fund’s responsibility for impaired assets that it may inherit once the single supervisory mechanism commences. There are growing divisions within the 17-member bloc about the issue of retrospective legacy assets and the responsibility of the fund for debts acquired before the establishment of the Single Supervisory Mechanism.
LIQUIDATORS TO PURSUE FINGLETON FOR €1m BONUS AND €70,000 PERKS - Liquidators appointed to wind-down the Irish Nationwide Building Society will pursue former boss Michael Fingleton for his controversial €1m bonus and more than €70,000 racked up in lavish expenses claims, says today's Irish Independent. New details of the extravagant culture of entitlement in the bank - which has cost taxpayers €5.4 billion - have emerged, with tens of thousands of euro racked up in chauffeur bills, fine wines, expensive wedding gifts and rugby tickets. And Mr Fingleton also billed the society for a €2,700 hotel stay in the five-star Dorchester Hotel, in London, in May 2009, a month after he resigned as managing director. But he has refused to repay any of the expenses, saying they were incurred for conducting the bank's business. Mr Fingleton stepped down as managing director from Irish Nationwide when it was in freefall after lending billions of euro to property developers. He left following months of political pressure to hand back a controversial €1m bonus he received in 2008, shortly after the Irish banking system was saved by the government's bank guarantee. The society was taken over by the Irish Bank Resolution Corporation (IBRC). KPMG has been appointed to liquidate IBRC over the next six months, and it is understood it will pursue Mr Fingleton.
BARCLAYS PLANS £2 BILLION COST-CUTTING - Barclays is preparing to cut at least £2 billion from its annual cost base of £20 billion as part of a strategic overhaul to be presented by the bank on Tuesday, say bank insiders and analysts. The cuts are to focus on a retrenchment from some of Barclays’ investment banking operations in Asia, particularly its equities franchise, as well as a partial wind-down of retail and commercial banking in parts of Europe, such as Italy, bankers said. The Financial Times says that as many as 2,000 jobs are set to go in the investment bank, with many thousands more at risk in other areas, under plans to be unveiled by Antony Jenkins, chief executive. Mr Jenkins, who started in the job in August, is struggling to reinvent Barclays’ ethical values alongside a mission to revive financial performance. He has told colleagues he will pull the investment bank out of areas that conflict with those values, such as the trading of food-based commodities and the kind of aggressive tax structuring for which the bank was once famous. At its peak, Barclays’ controversial tax structuring unit, led until 2009 by Roger Jenkins, contributed the bulk of the group’s investment banking revenue.
RADICAL NEW BID TO CLAMP DOWN ON SCANDAL IN CITY - The internal risk controls of banks and financial firms will be overhauled by a radical new industry code of conduct that aims to prevent a recurrence of the rogue trading and interest-rate fixing scandals that have gravely damaged the reputation of the City of London in recent years. Internal auditors will be given far greater powers under the new code, and will report to chairmen rather than chief executives to safeguard their independence, writes today's London Independent. A draft version of the new code, which has been drawn up by the Chartered Institute of Internal Auditors (IIA) with input from regulators at the Bank of England and the Financial Services Authority, is published today and promises "significant change" for the internal auditing processes of financial firms. Among the provisions, which will now go out for consultation, is an explicit requirement for internal auditors to have regard to the reputation and values of the organisation as they go about their work. The code also says auditors should be given free rein to assess the risks being run by any part of the business. Inspectors should report to the company's chairman, rather than chief executives, in order to guarantee their full independence. According to the IIA, the new code is designed to furnish company boards and regulators with a "benchmark" against which they can judge the effectiveness of internal audits.