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Irish bank chairman quits over his huge hidden loans
(Agencies)
Updated: 2008-12-19 21:32 DUBLIN, Ireland -- The chairman of Ireland's embattled Anglo-Irish Bank Corp. has resigned after investigators discovered he had hidden from shareholders euro87 million ($125 million) in personal loans from the bank.
Sean FitzPatrick said in a statement Thursday night he had broken no laws. "However, it is clear to me, on reflection, that it was inappropriate and unacceptable from a transparency point of view," he said. In a statement Friday to the Irish Stock Exchange, FitzPatrick's successor Donal O'Connor announced that the bank was launching its own review of how Anglo-Irish Bank is managed internally, specifically its policy of floating loans to its directors totaling euro150 million. "The board is determined to do what is right," said O'Connor, a veteran accountant, who previously was a senior partner in PriceWaterhouseCoopers. He pledged to oversee "a thorough review of governance and this will commence, using independent expertise, immediately." Ireland's Financial Services Regulatory Authority said its investigators discovered FitzPatrick's hidden loans during a wider trawl of Anglo-Irish records. It found FitzPatrick had repeatedly transferred the loans out of Anglo-Irish into a rival institution, Irish Nationwide, and back again over an eight-year period to ensure they were not disclosed to shareholders in annual accounts. FitzPatrick is Ireland's first high-flying casualty from the global financial crisis, which spurred the government two months ago to issue sweeping taxpayer-backed insurance to all deposits and liabilities of Irish banks. No Irish bank has failed or asked to use the insurance, but analysts and investors consider Anglo-Irish the most likely candidate, given its exceptionally high exposure to loans to developers, commercial property portfolios and idle construction projects. Construction and property speculation fueled more than a decade of Ireland's Celtic Tiger boom, but both are in crisis today as the country falls into a hard recession. Earlier this month Anglo-Irish announced it was setting aside euro500 million to cover future bad debts on its books, but insisted it would remain profitable. Investors are deeply skeptical. While shares in all four of Ireland's publicly listed banks have plummeted over the past 18 months, Anglo-Irish has fallen the hardest in expectation that the government will intervene with a bailout, and, possibly, an enforced merger with a stronger rival. On Friday, Anglo-Irish shares fell 40 percent to a record low of euro0.19 in the first few minutes of Dublin trading, then recovered within the hour to euro0.29, still 10 percent down. At its mid-2007 peak, Anglo-Irish shares valued the bank at euro13.3 billion. They were worth less than euro235 million Friday. |
