Ireland's bank bosses warned: Sort out the tracker mess or you'll be in the firing line

THE JOBS OF individual bank directors could be at risk if they do not deliver on a timeline to compensate customers of the tracker mortgage scandal.

The State has a majority stake in AIB and Permanent TSB and a minority stake in Bank of Ireland, so the influence and the pressure the minister can exert is most relevant to these banks.

Last week, Finance Minister Paschal Donohoe met with the CEOs of the major banks to “admonish” them and their “disgraceful” behaviour.

A timeline for when affected customers would be repaid was agreed with government and it was announced that two reports on the scandal and on the culture within the banking sector are to be completed.

Donohoe said he would be holding the bank bosses “personally responsible” for resolving the situation that saw thousands of bank customers wrongfully taken off or denied a tracker mortgage.

While the minister ruled out removing a bank’s board in its entirety, stating that boards need to be in place in order to meet requirements under company law, he said options are open to him in terms of removing individual directors.

“There are many actions that will be open to me next year if the matter is not resolved, including pay, in terms of the tenure of individual directors, and including my role in corporate resolutions,” he told reporters yesterday.

“I am willing to do any or all of them if the timelines and actions committed to” fail to be delivered, he said.

Using his influence as the largest shareholder, the minister can move to remove directors from the board at the bank’s Annual General Meeting (AGM) where directors are appointed.

A statement from the Department of Finance said if the Central Bank deems that the progress made on this issue has not been sufficient or acceptable, there are a range of possible policy measures available to the minister.

These include “targeted activist actions as a shareholder in three of the banks consistent with the protection of the taxpayers’ investment over the medium term”.

It added that the “tenure for directors” is an area the minister could target and that would be consistent with activist actions open to him as a shareholder.

Shareholder in the banks 

As a shareholder in Bank of Ireland, PTSB and AIB, Donohoe said he can also move to restrict bankers pay and bonuses.

Transport Minister Shane Ross said the Independent Alliance stood by its remarks last week that they would prefer a Garda investigation into the scandal.

However, the minister said he would not be pushing the matter, stating that he is happy to see how the investigations progress.

Whether the gardaí get involved is a matter that will “be determined by the report by the Central Bank”, Donohoe said last week.

At the announcement of a raft measures into the government’s plans to clamp down on white collar crime, Ross said “no one is immune from being discovered if they are involved in white collar crime… this government is going to be tough and continue to be tough on white collar crime”.

He said the banks have been “a constant thorn” for the last ten years.

“We would be very happy to support any further measures,” said Ross.

“We support totally what the Minister for Finance has done so far, but if he finds that the banks are wanting, in any way, we will fully support any measures he takes as a shareholder, including taking decisions to remove directors.”

The Independent Alliance are “100% behind this drive”, concluded the minister.

It is believed the number of customers impacted by the widespread scandal could reach more than 30,000 people and cost more than €1 billion.

Written by Christina Finn and posted on TheJournal.ie