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Irish Nationwide, Michael Fingleton: Could it go bust?


cyberianpan

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Irish Times

Irish Nationwide chief executive Michael Fingleton directly approved the loan of €4.1 million to solicitor Michael Lynn for the purchase of a property in Howth, a court heard yesterday. Dominic Coyle reports.

In an affidavit, head of home loans at the building society, Brian Fitzgibbon, also said Mr Fingleton was personally responsible for bypassing the financial institution's own procedures.

Mr Fitzgibbon said a credit committee set up by the Irish Nationwide Building Society to approve home loans over €1 million was merely "a device" to satisfy the Irish Financial Services Regulatory Authority and, in practice, there was "limited compliance" with the rules of the society.

Loans were "entirely informal and controlled by Michael Fingleton", he said.
...
Mr Byrne owes the building society €10.5 million; Mr Lynn owes it more than €10 million.
Now I'm not saying that €20m is enough to sink it but... if they're not doing proper loan risk assessment at all might there be more problems there?

As we've seen with the Gasworks it's quite possible that some developers are in negative equity situations & Irish Nationwide is looking shaky.

Also the Irish Financial Services Regulatory Authority's audits are a disgrace. When they do an audit:

1) They bring their rules in with them
2) Read the polcies in the bank
3) Ask for summary reports

And compare all 3!!

They never actually dig down onto the source systems and if they do anything like sampling it is always from a "supplied list". They don't have many staff with banking experience, they don't have any IT staff that I've ever seen...

I wouldn't be confident now.

cYp
 

Helium Three

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cyberianpan said:
Also the Irish Financial Services Regulatory Authority's audits are a disgrace. When they do an audit:

1) They bring their rules in with them
2) Read the polcies in the bank
3) Ask for summary reports

And compare all 3!!

They never actually dig down onto the source systems and if they do anything like sampling it is always from a "supplied list". They don't have many staff with banking experience, they don't have any IT staff that I've ever seen...

I wouldn't be confident now.

cYp
C'mon cYp you are making that up - aren't you???
 

cyberianpan

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Helium Three said:
cyberianpan said:
Also the Irish Financial Services Regulatory Authority's audits are a disgrace. When they do an audit:

1) They bring their rules in with them
2) Read the polcies in the bank
3) Ask for summary reports

And compare all 3!!

They never actually dig down onto the source systems and if they do anything like sampling it is always from a "supplied list". They don't have many staff with banking experience, they don't have any IT staff that I've ever seen...

I wouldn't be confident now.

cYp
C'mon cYp you are making that up - aren't you???
It is pretty much like that, the chimps look at what they are shown and never wander off page, they don't know ennough about how banks operate. I was trying to find link to story from 3,4 weeks back where the banks said they'd pay the Regulator to hire more/better staff !

As for the "funds" that the Stock Exchange rubber stamps (under devolved power from the Regulator) ... well they're even worse.

cYp
 

kerrynorth

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Anglo-Irish has to be the favourite to go. It also has to two boyos plus the ISTC failure and MCHL who went belly up and a liquidator appointed owing them E23.6m. Thats only 4 large ones we know of that possibly account for tens of millions of losses and heaven knows what else is lurking in their loanbook!
 

kerrynorth

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toxic avenger said:
I wouldn't trust Fingleton on anything. No doubt there'll be a flood in Nationwide HQ and the relevant documents will be tragically lost... Again...
I'm sure this loans manager would be smart enough to cover ass and had the photocopier on overtime.
 
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Fingleton's previous - This from the Tribunal the very same morning Dunlop broke down in April 2000:

RTE: "The Chief Executive of the Irish Nationwide Building Society, Michael Fingleton, was earlier accused at the Tribunal of adopting a cavalier approach to orders made by the Tribunal chairman. Mr Fingleton had been ordered by the Tribunal to produce documents relating to accounts in the Cork branch of Irish Nationwide but failed to produce all the required documents. At this morning sitting, Mr Patrick Hanratty, Senior Counsel for the Tribunal, said Mr Fingleton's attitude had been cavalier in the extreme. Mr Justice Flood said it had taken almost 10 weeks to get to this stage and the response from the Building Society had not been appropriate. Mr Fingleton denied there was any effort to avoid handing over the documents." April 19th 2000.

Said documents unfortunately later claimed to have been destroyed in flooding...
 

stanley

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Fingleton has always behaved like a dictator at INBS, every decision is his and everyone must cowtail to the lord and master, it is as if the money is his and he can do with it what he wishes (ala Bertie), Fitzgibbon should have known about this autocratic style before he took the job.
 

Anorakphobia

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stanley said:
Fingleton has always behaved like a dictator at INBS, every decision is his and everyone must cowtail to the lord and master, it is as if the money is his and he can do with it what he wishes (ala Bertie), Fitzgibbon should have known about this autocratic style before he took the job.
An atrocious company and to think they recently baulked at a 2bn offer (bet they'd take it now!!!)
I am not one bit surprised to hear allegations that procedures were just a sham and Fingleton essentially just had carte blanche.
I'd have been astonished to have heard otherwise, it concurs with everything I've ever heard about INBS.
 

Nikkeboentje

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I work in the financial sector in Dublin and I have also heard several times that Fingleton acts like a dictator and what he says goes. There has been a huge turnover of senior staff there and suspect that has something to do about them falling out of favour with Fingleton.
Trying to pin the blame of the loans on a single staff member, Fitzgibbon, is stupid. All the other financial institutions have drawn a line under the matter and are not looking for anyone's scalp. It would appear that Fitzgibbon fell out of favour with Fingleton but instead of going quietly like the others, Fitzgibbon is prepared to fight. I will follow this with great interest.
 

Apparatchik

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kerrynorth said:
Anglo-Irish has to be the favourite to go. It also has to two boyos plus the ISTC failure and MCHL who went belly up and a liquidator appointed owing them E23.6m. Thats only 4 large ones we know of that possibly account for tens of millions of losses and heaven knows what else is lurking in their loanbook!
Anglo is heavily exposed to the commercial property sector, due to its penchant for funding developments and also involving its private clients in the deal as equity participants. So pervasive is this view that the bank's management have had to come out and publicly deny it faces a liquidity crisis. The vehicle by which they did this was a note a few weeks back from Dresdner Kleinwort that was bluntly titled "No liquidity or funding problems". If Anglo goes, the celtic tiger can be safely stuffed, wall-mounted and consigned to memory.
 

cyberianpan

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Nikkeboentje said:
I work in the financial sector in Dublin and I have also heard several times that Fingleton acts like a dictator and what he says goes. There has been a huge turnover of senior staff there and suspect that has something to do about them falling out of favour with Fingleton.
Trying to pin the blame of the loans on a single staff member, Fitzgibbon, is stupid. All the other financial institutions have drawn a line under the matter and are not looking for anyone's scalp. It would appear that Fitzgibbon fell out of favour with Fingleton but instead of going quietly like the others, Fitzgibbon is prepared to fight. I will follow this with great interest.
Mmmmm I've heard things about Fingleton also.

Real issue is that many people have deposits with IN ... they rely on the Financial Regulator to police IN.

However the Financial Regulator doesn't really do audits - it occasionally does things that look like audits - so if there's any problems they sure ain't gonna find them.

Given the small size of IN, its high staff turnover, lack of serious professionals I'd be far more worried about it than Anglo.

cYp
 

Nikkeboentje

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I can't see Irish Nationwide going bust, but I can see the potential purchase price dropping. Obviously any purchaser will want to ensure that there is no potential litigation pending and that there are no more skeletons hiding any where. In any event, I predict that this must be the end of Fingleton as MD.
 

TheBear

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<Mod>Moved to the Economy forum.</Mod>
 

HanleyS

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Anglo is one to watch at the moment. If I had a Delta Exchange account I would be selling Anglo big time right now.
 

zakalwe

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Helium Three said:
cyberianpan said:
Also the Irish Financial Services Regulatory Authority's audits are a disgrace. When they do an audit:

1) They bring their rules in with them
2) Read the polcies in the bank
3) Ask for summary reports

And compare all 3!!

They never actually dig down onto the source systems and if they do anything like sampling it is always from a "supplied list". They don't have many staff with banking experience, they don't have any IT staff that I've ever seen...

I wouldn't be confident now.

cYp
C'mon cYp you are making that up - aren't you???
i'm afraid he is. the regulator has quite a few ex big 4 banking & capital markets auditors. i have worked with and met quite a few, and they had sterling reputations when in private practice. furthermore they can rely on the controls and IT systems audits carried out by the bank's auditors.
the staff come from 3 sources. the old banking supervision section of the central bank, on secondment from the dept of finance, and recruited externally.

while i had much dealings with them in my former days as an auditor, when i moved into my current role in a bank, i have not had any interaction with them.
 

cyberianpan

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zakalwe said:
Helium Three said:
cyberianpan said:
Also the Irish Financial Services Regulatory Authority's audits are a disgrace. When they do an audit:

1) They bring their rules in with them
2) Read the polcies in the bank
3) Ask for summary reports

And compare all 3!!

They never actually dig down onto the source systems and if they do anything like sampling it is always from a "supplied list". They don't have many staff with banking experience , they don't have any IT staff that I've ever seen...

I wouldn't be confident now.

cYp
C'mon cYp you are making that up - aren't you???
i'm afraid he is. the regulator has quite a few ex big 4 banking & capital markets auditors . i have worked with and met quite a few, and they had sterling reputations when in private practice. furthermore they can rely on the controls and IT systems audits carried out by the bank's auditors.
the staff come from 3 sources. the old banking supervision section of the central bank, on secondment from the dept of finance, and recruited externally.

while i had much dealings with them in my former days as an auditor, when i moved into my current role in a bank, i have not had any interaction with them.
Maybe I should have been clearer: I wasn't referring to ex-accountancy firm types who've seen the inside of a bank. What the regulator is lacking is staff with direct banking operations experience (process & IT).

Without these staff circles can be run around the regulator.

I understand that the regulator are urgently seeking to recruit these staff. (as said can't find article but also know this from inside)

cYp
 

morryah

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Messages
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Mr Fingleton was personally responsible for bypassing the financial institution's own procedures.

Loans were "entirely informal and controlled by Michael Fingleton", he said.
...
As Chief Exec you'd expect that he'd be doing more than rubber stamping. Surely some cases that might in theory not qualify (or even qualify) would need someone at senior level to take the final call and the rap if they went wrong.

I wouldn't say that this is the first time in any bank that a loan came back and bit the chief exec that he went out on a limb for.
 

zakalwe

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Cyp,

perhaps you've misunderstood my post.

there are trained bank auditors in the regulator, who's job was to assess and test the IT systems and controls with bank reporting systems. these guys are trained to test every bank, not just BOI or AIB's system. they've spent years delving into the systems of banks, insurance co's, finance vehicles, funds etc. finding the gaps and highlighting it to management, then increasing the audit fee for the subsequent year.

just because they haven't spent a year in the reconciliations dept in group finance in ballsbridge or baggot st or stephens green doesn't mean they know their business.

i know because i was one. i audited and was seconded to every major bank (and quite a few minor banks) in ireland and one in switzerland. do you think some guy in IT in a bank, by virtue that he worked for a bank, is more qualified than me?
 

cyberianpan

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zakalwe said:
Cyp,

perhaps you've misunderstood my post.

there are trained bank auditors in the regulator, who's job was to assess and test the IT systems and controls with bank reporting systems. these guys are trained to test every bank, not just BOI or AIB's system. they've spent years delving into the systems of banks, insurance co's, finance vehicles, funds etc. finding the gaps and highlighting it to management, then increasing the audit fee for the subsequent year.

just because they haven't spent a year in the reconciliations dept in group finance in ballsbridge or baggot st or stephens green doesn't mean they know their business.

i know because i was one. i audited and was seconded to every major bank (and quite a few minor banks) in ireland and one in switzerland. do you think some guy in IT in a bank, by virtue that he worked for a bank, is more qualified than me?
Hmmmm my issue is that say taking level of audit:

1) Regulator (who often designates someone else)
2) Financial Auditor
3) Internal Auditor

It has always been #3 that scares people the most. WIth good reason as they are way harder to bullshit because they know the ropes and have strong support (admittedly the banks nearly always fire them cos they find so much sh*t).

The issue is not whether someone such as yourself is more/less qualified. This issue is whether you ought be doing the job alone. Modern banking is a multi-disciplinary business and a sucessful audit needs to reflect this.

An audit certainly ought be led by someone with an accounting/regulatory background but as part of the team , subject matter experts with a deep understanding of area ought be deployed. For credit risk I would suggest a configuration of:

1) Lead: regulatory accountant with experience of Basle etc
2) Lender: a person with previous & recent senior lending experience
3) Analyst: a person with previous & recent credit risk experience
4) Systems: a business analyst with strong knowledge of credit operations and with some systems skills (e.g. SQL), possibly with experience of the package used in the bank (Fermat, SAS etc)

Without something closer to these the audit is a joke, I know as I was on the far side of a number of audits which were precisely that. Admittedly they did find things but they always missed the elephants.

This is why the Regulator is now hiring in these areas.


cYp
 
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