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News : Irish Economy Last Updated: Oct 21, 2010 - 5:48:50 AM


Fingleton told Government 10 days before issue of State bank guarantee, INBS was 'well managed' and 'very profitable'
By Finfacts Team
Oct 20, 2010 - 6:46:29 AM

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Irish Nationwide Building Society (INBS) chief executive, Michael Fingleton, told the Government 10 days before issue of State bank guarantee, that the society was 'well managed' and 'very profitable.'  

The Dáil Public Accounts Committee (PAC) on Tuesday published additional copies of Department of Finance paperwork from the period leading up to the issue of the State banking guarantee at the end of September 2008.

Fingleton sent a letter to David Doyle, secretary general, of the Department of Finance on Sept 19, 2008 claiming that despite its liquidity problems, it was a 'very profitable and viable financial institution.'

On Sept 05, 2008, Moody's, the international ratings agency, had downgraded INBS debt because of the exposure to commercial property and development, accounting for 80% of the loan book.

The State has committed capital of €5.4bn to save INBS from collapse.

On Sept 18, 2008, Basil Geoghegan of Goldman Sachs, the US investment bank, e-mailed the Department of Finance regarding an assignment to review  INBS's books and he referred to the society with the code 'Harmony.'

Geoghegan asked: "has there been interaction with the Irish auditing firms to discuss what are they going to do at year end across the sector? They have a huge responsibility to discharge this year."

They also had a huge responsibility to discharge prior to the crisis.

Last April, INBS reported a massive loss of almost €2.5bn for 2009 after providing €2.8bn for loan losses, having become a commercial property property lender in recent years. The society was established in 1873 by "far-sighted working-class men."

Under the management of Michael Fingleton over a 37 year period, the society was nominally owned by the depositors and after a reckless concentration on commercial property lending during the bubble, Fingleton was forced out with €27m pension pot and he had his board nod through a €1m bonus for failure as well as over €400,000 in lieu of holidays not taken. Almost half the commercial property lending was in respect of developments in the London area.

The Irish Industrial Benefit Building Society, forerunner of Irish Nationwide, began in October, 1873, when it was set up in a small room at 4 Harmony Row, off Fenian Street, Dublin 2, by "a small group of far-sighted working-class men."

Irish Industrial Benefit didn't trade from Harmony Row; that began on November 1 1873, from offices at 35 Denzille Street, Dublin 2. Later the original society was to move to 108 Lower Baggot Street. Then in July, 1927, the society moved to 6 Upper Camden Street, eventually moving to the adjacent 7 and 8 Upper Camden Street. The society retained its headquarters on Camden Street for virtually 70 years.

In 1975 the name of the organisation changed from the Irish Industrial Benefit Building Society to Irish Nationwide Building Society.

Finfacts report: Lenihan says failure of Anglo Irish Bank would "bring down" the country - - see 2 key videos here on the State bank guarantee.

Correspondence, dated 13th October, from Kevin Cardiff, Secretary General, Department of Finance:

  • Correspondence, dated 13th October, from Mr. Kevin Cardiff, Secretary General, Department of Finance: Cover Letter Cover letter

  • Correspondence, dated 13th October, from Mr. Kevin Cardiff, Secretary General, Department of Finance: Appendix 1 Appendix 1

  • Correspondence, dated 13th October, from Mr. Kevin Cardiff, Secretary General, Department of Finance: Appendix 2 Appendix 2

  • Correspondence, dated 13th October, from Mr. Kevin Cardiff, Secretary General, Department of Finance: Appendix 3 Appendix 3 - - Fingleton letter to DoF

Documents previously issued by the PAC.

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