The chief executive of the National Treasury Management Agency has said it will review its policies relating to the notice periods that apply to staff who leave to take up senior positions within the banking sector.
Addressing questions yesterday at the joint Oireachtas committee on finance, public expenditure and reform, NTMA chief executive John Corrigan said mobility with the private sector was an important component of its model as it is a skills-based organisation.
Fianna Fáil’s Michael McGrath raised the case of Michael Torpey, who joined Bank of Ireland last week as head of its corporate and treasury division from the Department of Finance, where he headed the shareholder banking unit.
This division is responsible for the State’s shareholdings in Irish banks.
‘Cooling-off period’
Mr Torpey had previously been employed by the NTMA before the unit was moved to the department of finance.
“The cooling-off period needs to be reviewed especially in the wake of the incident you referred to, but it’s difficult to have a one-size-fits-all policy in which we are paying people big money for gardening leave , but it probably does need to be finessed,” Mr Corrigan said.
Notice periods in the NTMA vary from one to three months for most staff and six months in the case of Mr Corrigan.
It is understood that any change in policy would only relate to new staff as existing contracts of employment could not be altered.
Earlier, Mr Corrigan told the committee that Ireland was well placed to raise the €10 billion it needs in funding to position Ireland to successfully exit the EU-IMF bailout programme. However, he said it would be “unwise to be complacent” about this.
“Markets do not necessarily move in a straight line and investor sentiment can be fickle,” he said.
The NTMA raised €2.5 billion earlier this month and securing the balance of the funding would give Ireland “the comfort of having a full year’s advance funding in place”.
It is likely to proceed with a syndicated issue of a longer-term bond before resuming scheduled bond auctions, Mr Corrigan said.
“We will remain adaptable in light of circumstances.”
He said the €12.2 billion raised from debt markets over the past year had eliminated the “challenging funding cliff” presented by a bond repayment of almost €12 billion due in mid-January 2014.
Market access
In terms of three-month treasury bills, Mr Corrigan said Ireland had “regained normal market access” following recent successful auctions.
Last week, its fifth such auction raised €500 million at an annual equivalent yield of 0.2 per cent.
He noted that there has been a significant decline in Irish bond yields last year.
“For example, the yield on the 2014 bond has declined from 7.58 per cent at end 2011 to 1.05 per cent currently, while the yield on the October 2020 bond has declined from 8.26 per cent at end 2011 to 4.11 per cent currently,” he said.
He said the rally in Irish bond yields has been driven by Ireland’s delivery on the terms of the Troika bailout; the elimination of the bond refinancing requirement in early 2014; and supportive initiatives from the EU and ECB on monetary policy and banking debt.
However, Mr Corrigan said the spread between Irish and German bonds remains high due to differences in our respective credit ratings.
