FERGUS MURPHY, head of the EBS and the last remaining chief executive of a State-guaranteed lender in position for more than a year, has said that he is “vulnerable” to being voted off the board of the building society at its annual meeting on May 29th.
Mr Murphy said he was “hopeful” he would be re-elected, despite the level of public anger towards bankers.
“I would say that I’m vulnerable given the environment – I could become the voodoo doll of Irish banking,” he said. “How many bankers would get through a one person, one vote situation at their institutions right now?”
He said that EBS, unlike the publicly-quoted banks, did not have institutional investors with large stakes, but relied on votes from its 440,000 members for the election of directors.
Retail shareholders “can’t get at directors at other financial institutions” because they are not part of the larger block voters, he said.
“This is a real referendum at EBS rather than at a Plc where institutional investors make the vote a fait accompli,” he said.
He said that failing to be re-elected would make his position “very difficult” because he would remain as chief executive but not have a place on the board.
Mr Murphy said the excesses of property lending in Ireland pre-dated his appointment to the EBS in January 2008.
“I wasn’t in the country, never mind in a bank in the country then – one year in banking is a very short period of time,” he said.
“I have been passed a hospital pass and I’m trying to deal with it.”
EBS made a pretax loss of €38 million for 2008 after writing off €110 million on bad loans, primarily on the society’s €527 million property development loans.
This led to the resignations of chairman Mark Moran, who will step down at the meeting, and finance director Alan Merriman.
Six candidates, including Mr Murphy, are in the running for four seats on the EBS board. External candidates, solicitor Linda O’Shea Farren who was narrowly defeated last year, a former Garda assistant commissioner Martin Donnellan and member Mark Connolly, are also standing.
They are joined by Tony Moroney, head of the EBS broker business, Haven, and senior independent director Barbara Patton.
Mr Murphy said the €527 million development loans could be used as a “dummy run” in the Government’s Nama “bad bank” plan.
“It would allow them to run a test case through their system to see if it works before they run €30 billion from AIB and €20 billion from Bank of Ireland,” he said. He said the loans left behind in Irish Nationwide following Nama would be “best placed in EBS to build a bigger mutual” and that this could be “done overnight” without any new legislation.
He said he would prefer a “strong mutual” in the Irish market as mutual and co-operative banks supplied “ballast and competition to the Plc banks”.
EBS would seek between €300 million and €400 million in capital from the Government.
