He was the man who told the nation about our entry into the EU-IMF bailout programme while the government was still in denial but Patrick Honohan will today call time early on his stewardship of the Central Bank of Ireland.
It is understood Mr Honohan will use the publication of the Central Bank’s annual report for 2014 as the opportunity to announce that he will step aside as governor around the end of this year.
According to an informed source, Mr Honohan informed Minister for Finance Michael Noonan of his decision about a month ago.
His seven-year term was due to expire in September 2016 but Mr Honohan, who will be 66 later this year, has decided to step down early. He will effectively be in the last year of his contract when he departs.
No comment
No comment was available on this shock development from either the Central Bank of Ireland or the department of finance, who will now have to set in train a process to find a successor to Mr Honohan.
The governor took on the role in September 2009, exactly one year after the State’s blanket guarantee of domestic banks, which ultimately led to a €64 billion bailout of Irish banks.
His time in charge coincided with a turbulent period for the Irish economy and the State, which was required to enter an €85 billion bailout programme with the EU and IMF in late 2010.
However, the State was able to make a clean exit the bailout programme in December 2013, becoming the first of the bailed out euro zone countries to do so.
His time at the helm also coincided with Quinn Insurance, then owned by Northern Ireland businessman Sean Quinn, being placed into administration and the Irish Bank Resolution Corporation being put into liquidation.
Both of these events were without precedent in terms of scale. More recently, Mr Honohan was behind the tighter loan-to-value rules on mortgage lending, which are designed to ensure that Ireland doesn’t experience another housing crash.
Mr Honohan was an outspoken critic of the government when he was appointed by the then minister for finance Brian Lenihan in September 2009.
He previously held the post of Professor of International Financial Economics and Development in Trinity, having spent almost a decade before that at the World Bank as senior advisor on financial sector policy.
Seen as a safe pair of hands and a straight talker, he was tasked with restoring confidence in the State’s banks and economy, and rescuing the Central Bank’s own reputation which had been tarnished by the collapse of the banking sector.
Backfired
He took command only months after the government had been forced to nationalise Anglo, an admission that the infamous bank guarantee had spectacularly backfired.
Under his watch, the Government effectively nationalised four of the State’s main lenders as it struggled to deal with the hole left on balance sheets from the property crash - a recapitalisation that cost the taxpayer €64 billion.
Perhaps his most famous intervention came in November 2010, when he went on RTÉ radio to declare a State bailout worth “tens of billions of euro” was imminent, in the face of repeated denials by the government of the day.
