Meeting: Oireachtas committee has written three letters to bank seeking a representative for questioning, writes Colm Keena
The governor of the Central Bank, Mr John Hurley, has said he sees no reason why representatives of AIB should not appear before an Oireachtas committee.
Mr Hurley made his remark to the Joint Committee on Finance and Public Services which has written three letters to AIB in recent weeks seeking someone to appear before it to answer questions.
The bank's chairman, Mr Dermot Gleeson, and the chief executive, Mr Michael Buckley, have responded by saying they do not believe representatives should appear before the committee until the facts behind the recent scandals at the bank are established.
Yesterday Mr Hurley, responding to a question from Mr Conor Lenihan TD, said he believed Oireachtas committees were a very important element of the State's democracy. He said he saw no impediment to AIB representatives appearing before the committee as long as the committee did not prejudice inquiries that are under way.
Mr Hurley said he did not believe recent scandals at AIB were a threat to the Irish financial services industry. "While the events currently under investigation carry serious reputational risks, they have not given rise to adverse implications for financial stability," he said.
Mr Hurley said that until the Investment Intermediaries Act 1995, which came into effect a year later, AIB Investment Managers Ltd (AIBIM), the AIB subsidiary at the heart of the Faldor scandal, was not a regulated body. The Act introduced regulation of investment intermediaries for the first time.
He told Ms Joan Burton TD that while the Central Bank had a role in relation to the AIB group, of which AIBIM was an element, "detailed regulation to cover the type of issues we have here simply wasn't there." He said Ireland wasn't different to other countries at the time in relation to the non-regulation of investment business.
... Mr Liam Barron, director general of the Central Bank, told Mr Lenihan that until the 1995 Act, it was not illegal to favour particular funds when allocating deals conducted by investment intermediaries such as AIBIM.
He said a financial institution could conduct in the region of 300 deals in a day and the deals would be later allocated to the various funds managed by the bank. Because some share prices could have shifted by the time the deals were being allocated, there was scope for favouring particular funds.
The 1995 Act made this a crime but it was not unlawful prior to the Act. He said deals now have to be allocated simultaneously to their being transacted.
Mr Hurley said many of the matters of concern now had their roots in an earlier period when the compliance environment was much weaker. The matters which have arisen need to be dealt with for the sake of the reputation of the industry. However he believed that the regulatory regime now in place was a "leading edge" regime. Matters now being disclosed but which belonged to an earlier period, would not go undetected under the current regime.
The committee is to invite Ms Dorothea Dowling, of the Motor Insurance Advisory Board, to appear before it in relation to questions she has suggested should be put to the banks. It is also to invite the general secretary of the Irish Bank Officials Association, Mr Larry Broderick, to attend.
Senator Martin Mansergh said the banking system was vital to every aspect of the economic life of the State and he believed there was a need for AIB in particular to re-establish confidence in the integrity of its dealings.
He appealed to the chairman of AIB, Mr Dermot Gleeson SC, to re-consider his decision not to attend. "I would have thought the chairman coming to the committee could have performed a valuable function in terms of re-building confidence," he said.
