IL&P REJECTED MERGER PLAN WEEKS AFTER €440 BILLION GUARANTEE - Finance Minister Brian Lenihan was given a stark rebuff when he tried to radically restructure the banking system at the height of the financial crisis by merging two of the country's three largest banks. The Department of Finance wanted to bring about a merger or buyout of Irish Life & Permanent (IL&P) by Bank of Ireland, according to a letter obtained by the Irish Independent. But the letter from IL&P to Mr Lenihan - sent just weeks after the Government staked billions of taxpayers' money to guarantee bank deposits - shows the country's third largest bank refused to be guided by the Finance Minister. IL&P said Mr Lenihan's proposal would cause the "destruction" of thousands of jobs and Bank of Ireland was too weak anyway to take on another institution. The ramifications of the decision will escape scrutiny by the Government banking inquiry, which will examine events only up until the bank guarantee on the night of September 29, 2008. The letter raises concerns about Mr Lenihan's ability to compel the banks to do the Government's bidding, despite the €440 billion guarantee.
***
BANKS' STAFF GUIDELINES TO BE REVIEWED - The Financial Regulator is preparing to carry out a review of policies on conflicts of interest across the financial institutions for bank employees who borrow from their own institutions or other lenders and staff who are engaged in business outside the banks. The Irish Times has learned that the regulator plans to look at bank guidelines on staff who have directorships of outside companies or shadow directorships where relatives or associates hold the positions on their behalf. The review, which will be led by the banking supervision department at the regulator, will also assess the banks' internal policies on employees who have impaired loans with the financial institutions or with other lenders. It is understood that the regulator's concerns are likely to focus on whether the financial institutions have sufficiently strong controls to monitor conflicts of interest governing bank staff. The regulator's review is expected to look at the banks' lending policies for all employees and not just for senior management involved in large-scale borrowing outside their bank.
***
SHELL TO LOOK BEYOND TAR SANDS - Royal Dutch Shell's expansion in Canada's controversial tar sands will be "very much slower" than in recent years, the company's new chief executive has said, as the group makes a strategic shift away from high-cost "unconventional" oil production. Peter Voser, who took over at Europe's second-largest oil and gas group in July, told the Financial Times that Shell now planned to rely more on conventional oil and gas reserves for its future growth. He also cast doubt on the merit of corporate takeovers, saying 'those who buy normally lose'. The shift back to conventional oil and gas represents a break from the strategy of Jeroen van der Veer, Shell's previous chief, who planned a steep rise in the share of the company's production coming from unconventional resources. It represents a vote of confidence in Shell's ability to find new oil and gas fields, which has in the past been one of the group's weaknesses.
***
£1m CAO FOR GOLDMAN SACHS LONDON BANKERS - The 100 most senior employees at Goldman Sachs in London will have their total pay capped at £1 million when the Wall Street bank reveals its 2009 bonuses this week, in a nod to the Government's calls for cutbacks in bankers' pay, says The Times. Less senior British employees who are awarded more than £1 million for their work last year will have 60 per cent of any amount over £1 million paid in deferred stock, in line with Financial Services Authority guidelines. Goldman Sachs' 32,500 workers worldwide will share the burden of Britain's one-off 50 per cent tax on bonuses above £25,000, which is likely to reduce the bank's compensation pool by hundreds of millions of dollars. Analysts estimated that the tax sliced about £300 million from the pay pool of JP Morgan, a rival bank, which was £9.3 billion for 2009. Goldman Sachs will inform bankers of their individual pay packets over the coming week.
