ELDERFIELD TALKS TOUGH ON BANKING REGULATION - In his first public speech yesterday Matthew Elderfield, the new chief at the Financial Regulator, was talking tough about the future supervision of the banking sector as he set out his priorities for the way forward in banking regulation.
Peter Oakes, of Compliance Ireland, says that Mr Elderfield has sent out a very clear signal of the way he will run the regulator's office. He says that unlike his predecessors, the new regulator also came out and made the business case for Ireland being a central hub in Europe for dynamic and financial products. He says it looks as if Mr Elderfield will bring a blend of commercialism and business acumen to the job, in addition to credible threats of deterrent in terms of enforcement.
The regulator has promised an intrusive approach to regulation and enforcement at systemically important banks. Mr Oakes says that banks can now expect 15-20 regulatory staff per bank looking at their operations. He also says that Mr Elderfield will not find a lot of friends among the 'grey-haired former bank executives and finance officials' who are doing the circuit looking for their non-executive directorships. 'Although he speaks quite mildly, he does seem to carry a big stick,' Mr Oakes states.
Brian Lucey, associate professor of Finance at Trinity College, says that two issues still bedevil repairing the reputation of Ireland in terms of financial services. He says the first is governance and the issue of who is involved, while the second is the issue of recapitalisation.
Professor Lucey states that three players in the governance of the Irish financial services industry - the regulator and his office, the existing bank management structures and the political sector. He says it is always going to be the case in a small country that there is political figures involved in banking. He says he understands that the financial regulator has been heavily rebuffed by some of the members of the Dáil and Seanad when he asked them whether or not they had loans outstanding to NAMA-bound organisations.
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MORNING BRIEFS - The chairman of Anglo Irish Bank Donal O'Connor is to step down next July and he will be replaced by Alan Dukes. His departure will leave only Government-appointed directors on the board of the nationalised bank and it is expected Finance Minister Brian Lenihan will appoint up to three non-executive directors to the board of Anglo in the next few weeks. Anglo has issued legal action against its former chairman Sean FitzPatrick to recover loans of €70m. Mr O'Connor's executive role at Anglo ended last September on the appointment of of Mike Aynsley as chief executive. Previously he was chairman of the Dublin Docklands Development Authority. A report into corporate governance at the state body is due out soon.
*** A one-year probe into the collapse of Lehman Brothers found 'credible evidence' that top executives, including the former chief Dick Fuld, approved misleading financial statements and used an 'accounting gimmick' to flatter results. The report by a court-appointed examiner also said that there was enough evidence to claim that Lehman's auditors Ernst & Young failed to 'question and challenge improper or inadequate disclosures' in the firm's results. The report found evidence that during the investment bank's top executives did not disclose the use of an accounting device that enabled the bank to hold $50 billion off its balance sheet.
*** An ex-employee of Europe's biggest bank HSBC stole the details of 24,000 clients from a branch in Switzerland. The bank revealed that a former computer specialist who fled to France, had stolen the details from its Geneva private bank three years ago. 15,000 of the accounts are still active. The robbery has strained relations between Switzerland and France, amid fears in Bern that the French authorities could use the stolen data to detect tax evaders and pass on details to other countries.
*** On the currency markets, the euro is trading at $1. 3701 cents and 90.92 pence sterling.
