The Irish Independent reports that former Irish Nationwide boss Michael Fingleton finally said he was sorry last night about the effect of the banking crisis on the country.

But there was still anger about his failure to comment on his €1m bonus, which he has so far refused to return to Irish Nationwide. Mr Fingleton made his first public comments since the banking crisis erupted two years ago when he was questioned at Dublin airport after returning from a trip to Spain. He admitted he had a "sense of remorse" about what had happened to the country as a result of events in Nationwide and other financial institutions.

"Of course I have, of course I have, like anybody else, I have indeed," he said.

It came after Central Bank Governor Patrick Honohan hinted this week that the final cost to the taxpayer of Irish Nationwide's bailout could rise to more than €3bn -- well above the €2.7bn already announced.

Mr Fingleton, who was in charge of Irish Nationwide for almost 30 years until his retirement in April last year, would not comment on whether he "felt guilty" about what had happened.

"I've already made my comment. That's it. I can't say anymore. Thank you," he said in an interview with RTE.

Mr Fingleton also refused to say if he would pay back the €1m bonus he received just weeks after the Government introduced the €440bn state bank guarantee in September 2008.

"I've already made a full public statement on that, that you're fully aware of," he said.

Back in March last year, Mr Fingleton said he was entitled to the payment, but wanted to repay it "because of the effect on my family with a continuing 24-hour media siege on my home". But despite extensive correspondence with Irish Nationwide over the past year and a half, the bonus has not been repaid.

Fine Gael deputy finance spokesman Kieran O'Donnell said last night that ordinary people were looking at this situation while their jobs were at risk and their homes in negative equity. "That €1m is an outrageous figure and should be repaid," he said.

Recall

And he called for the Dail to be recalled from its summer break two weeks earlier than planned (back in early September rather than the end of September) so that the banking crisis and the potential renewal of the banking guarantee could be debated.

Mr Fingleton indicated last night that he was willing to account for his actions at the forthcoming banking inquiry by saying he would co-operate with any investigation.

"I've already co-operated -- and I'll continue to co-operate in every way I can," he said.

And he strongly defended his former building society's warehousing over an eight-year period of at least €87m in hidden Anglo Irish Bank loans to former Anglo chairman Sean FitzPatrick, who has now filed for bankruptcy.

"That's a matter under investigation, that'll be made very clear in due course, that we had no responsibility whatsoever for those loans," he said.

But Mr Fingleton would have had little choice but to appear before the soon-to-be established Commission of Inquiry, which will be specifically investigating what happened in Irish Nationwide as well as other financial institutions.

The Department of Finance confirmed last night that the commission would be able to force witnesses to attend, saying it had "certain compellability powers" under the Commission of Inquiry Act 2004.

Fine Gael's Kieran O'Donnell said he expected everyone to co-operate with the Commission of Inquiry.

"The Irish taxpayer is now footing the bill for the irresponsible and reckless actions that happened in terms of banking practices and they are entitled to a full account of what brought us here," he said.

One of the commission's specific terms of reference is to investigate why Irish Nationwide and Anglo Irish Bank adopted business models and strategies which were implemented by "senior management" and which "resulted in those institutions experiencing severe financial distress".

The building society he dominated for more than 30 years, Irish Nationwide, is now transferring €8.5bn of its €10bn commercial loan book to the National Assets Management Agency (NAMA).

NAMA applied a 58pc haircut to Nationwide's first tranche of toxic property loans, while a massive 72pc discount was applied to the second batch.

The Irish Independent also reports that Michael Fingleton's comment yesterday that he is willing to co-operate with the investigation into the banking crisis is likely to make some Irish Nationwide borrowers nervous -- not to mention politicians and former regulators.

Later this year, the Government's Commission of Investigation will look at what happened at the main banks between January 2003 and September 2008 -- including what went on at Michael Fingleton's Irish Nationwide.

If the former chief executive wanted to embarrass certain public figures, then he could do so by disclosing the terms and conditions of their loans and how they were granted.

RTE reported late last year that Mr Fingleton fast-tracked millions of euro in loans to leading politicians -- including €1.6m to the former finance minister, Charlie McCreevy.

Mr Fingleton's time running the society is likely to be explored in detail by the commission, although it is not clear if it will look at loans to politicians and whether they were given preferential treatment.

He could also shed light on the relationships between his building society and the political establishment and regulatory system of the time.

For example, did politicians (and the Department of Finance) know about the kind of lending that Irish Nationwide was doing?

Did the politicians know about the joint ventures the society entered into with various developers?

What did they know of pay practices at the society and the kind of control exercised by Mr Fingleton at board level?

Disastrous

Staff from the Financial Regulator's office could also face some embarrassment during evidence from Mr Fingleton, as various corporate-governance shortcomings were seemingly not combated by the regulator.

But the key question facing Mr Fingleton concerns how he could allow the society to build up such a large exposure to commercial-property lending at a building society which had traditionally specialised in mortgage lending.

For example, the customer loan book of Irish Nationwide grew from €4.27bn in 2003 to €10.4bn in just five years -- an astonishing increase of 143pc.

The profile of the loan book also changed during this period, with more loans to developers as a proportion of the book.

Mr Fingleton presumably thought he had enough capital in place if large numbers of these loans went sour.

But disastrously, the building society was hopelessly under-capitalised when the crash came, forcing the Government instead to mop up the losses with taxpayers' money.

During Mr Fingleton's time, the society's loan book was overseen by a tiny number of people, personal guarantees were not sought from many leading developers and many clients were not asked to put their own money into major loans.

Not only were 100pc mortgages common, but loans to some developers were given on the basis of 110pc loan-to-value.

These practices will be scrutinised by the commission. But already, the management which took over from Mr Fingleton has disclosed the kind of lending practices that took place.

Hopefully, Mr Fingleton can shed additional light on these matters in the coming months.

The Irish Times reports that a new student loan scheme should be introduced “urgently” to address the financial crisis facing higher education, according to a Government-commissioned report on the future of third-level education.

The Hunt report, due to be considered by Cabinet shortly, recommends that students “contribute to the cost of their education” by receiving a loan to cover the cost of fees. This would have to be repaid once they had reached a certain income threshold after graduating.

The Government is under increasing pressure from university heads to reintroduce fees to allow them to cope with record student numbers and meet demands that they play a greater role in economic recovery.

The report, the most comprehensive analysis of higher education in a generation, calls for an overhaul of institutes of technology, closer monitoring of the workload of academic staff and the creation of “clusters’’ of excellence between colleges.

New details of the proposed student loan scheme have emerged as almost 58,000 students received their Leaving Certificate exam results yesterday.

Although the expert group, chaired by economist Dr Colin Hunt, recommends “that an income-contingent loan facility for student fees be introduced urgently”, it does not specify the income threshold or the scale of tuition charges.

Sources say the expert group believes this is a matter for Government. The Hunt report outlines the financial pressures on the third-level sector, which faces an unprecedented 30 per cent surge in student numbers over the next decade.

It says the huge dependence of colleges on State funding is unsustainable in the longer term, and that non-State funding is urgently required.

It also raises the possibility that some major employers should play a more active role in supporting specific higher-education programmes.

The recommendations from the Hunt report will put pressure on the Green Party to explain how to fund the sector in the absence of new tuition charges.

The Greens have vetoed any change to the free fees scheme in the revised programme for government, and Minister for Education Mary Coughlan told The Irish Times last night that this agreement was seen in the Coalition as non-negotiable.

Other key recommendations in the Hunt report include:

• that 14 institutes of technology could be redesignated as technology universities, provided strict quality assurances were provided;
• part-time students – currently ineligible for maintenance grants and required to pay fees – should gain the same entitlements as full-time students;
• a new workload management system both in universities and the institutes of technology would be more closely monitored;
• much closer collaboration is required between colleges to help create “clusters’’ of excellence; and
• an expanded role should be considered for the Higher Education Authority in managing the sector and linking spending to national objectives.

Ms Coughlan has also ruled out an increase in the €1,500 student registration charge this year, while she is more circumspect about an increase in 2011.

The Irish Times also reports that Minister for Finance Brian Lenihan authorised significantly increased salaries for senior Anglo Irish Bank staff last year because of the “increased workload” facing the bank.

Salaries for the chief executive of Anglo and other banks which availed of the Government’s credit guarantee were capped at €500,000 by the Minister last year.

The recommended pay levels for other senior executives were set by an independent committee established to examine bankers’ pay, known as the Covered Institutions Remuneration Oversight Committee.

Following discussions with Anglo Irish Bank, Mr Lenihan increased salaries for the chairman and board members of Anglo to levels above that recommended by the committee, records show.

The chairman’s fee was increased from €218,000 to €250,000, while non-executive directors’ fees were increased from €44,000 to €73,000.

A letter to Anglo from the Department of Finance states that the Minister agreed to the fees in excess of those recommended by the independent committee on the basis of the “exceptional circumstances” of the bank and the “resulting increased workload for the board”.

In addition, an unpublished internal memo indicates that the Minister or his officials had been proposing to cut the pay of Anglo’s chief executive to €394,000. He later agreed to a salary cap of €500,000, in common with other major banks.

The document also includes proposed fees for Anglo’s chairman (€158,000) and for board members (€32,000) at levels significantly below what the Minister later agreed to. The memo was entitled, Minister for Finance directions on remuneration and included a table of salaries for chief executives and fees for board members “as required by the Minister for Finance”.

In a statement, a spokesman for the Minister said this document was only an internal section working paper and never went to the Minister. Later, when asked if the Minister was aware of the contents of the memo, the spokeswoman said that there was no evidence that the Minister was aware of it. On the decision to increase salary levels for other senior Anglo staff, the Minister’s spokesman said the board of Anglo was small at the time and the demands on non-executive directors were substantial. As a result, board members were required to sit on a significant number of sub-committees, in addition to regular board meetings. As for other senior executives whose salaries exceeded the €500,000 cap, Mr Lenihan agreed to the bank’s proposal of a 20 per cent reduction in salary, with pension entitlements unaffected. The details are contained in records released to The Irish Times under the Freedom of Information Act.

The Irish Examiner reports EBS Building Society will receive bids from private equity groups and bancassurer Irish Life & Permanent in the next few days, sources told Reuters.

The state-run building society has set a deadline of August 20 for offers and one source said three private equity groups — US firm JC Flowers, Britain’s Doughty Hanson and Dublin-based Cardinal Asset Management — are expected to bid, as well as Irish Life & Permanent. A second source confirmed the bancassurer will take part.

Irish Life & Permanent declined to comment.

EBS needs to find €775 million by the end of the year to shore up its capital base following the property market collapse and tougher regulatory requirements.

The Government has already injected €100m into the building society and has promised a further €250m of the overall amount through a promissory note, which spreads actual payments out over up to 15 years. The Government has said it would provide the rest of the money if the EBS is unable to source the capital elsewhere.

Building societies here, which are owned by their customers and are traditionally conservative institutions, lent aggressively during the Celtic Tiger years and have been burnt badly by the property sector collapse.

Central Bank governor Patrick Honohan signalled earlier this week that the cost of bailing out another building society, Irish Nationwide could top the €2.7 billion already promised as its loans are transferred to NAMA.

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