FORMER IRISH Nationwide chairman Michael Walsh stood down as a director of IIU, the investment company of financier Dermot Desmond, the day after it emerged that the Central Bank was to assess whether he was fit and proper to serve as a director.
Recently filed company records show that Dr Walsh resigned as a director of Dublin-based IIU (International Investment and Underwriting) on November 7th, 2011.
The previous day the Sunday Timesreported that the Central Bank planned to assess Dr Walsh to decide whether he should be a director of IIU, which is regulated by the Central Bank, under the regulator's fitness and probity rules.
A former professor of banking and finance, Dr Walsh was chairman of Irish Nationwide from May 2001 to February 2009.
He was appointed to the board of IIU in December 1994 and remained a director after his departure from Irish Nationwide.
Dr Walsh continues to work for IIU. A call to the office seeking comment was not returned.
His decision to leave IIU’s board will exclude him from the Central Bank’s tests, which will decide whether those directors of regulated firms who were previously at the banks when the crisis struck are fit and proper to retain these roles.
The new powers came into force at the start of December 2011 and give the Central Bank the authority to remove directors following statutory investigations.
The Central Bank sought to question directors of Anglo Irish Bank and Irish Nationwide who were in place at the time of the Government guarantee in September 2008 and who continued to work at other regulated institutions after leaving the lenders.
The fitness and probity tests will also apply to executive directors of the State-backed banks who were in place prior to the guarantee and who remain in their roles.
Letters have been sent to Bank of Ireland chief executive Richie Boucher, Irish Life Permanent chief executive Kevin Murphy and EBS chief executive Fergus Murphy, saying they may be investigated over their pre-crisis roles.
The Central Bank has sought responses on their track records.
In the next tier of individuals to be tested, the Central Bank will examine any former directors of Anglo and Irish Nationwide working at regulated entities over their pre-crisis roles at the banks.
Irish Nationwide has been nationalised over heavy losses on property lending and has received €5.4 billion from the Government.
Dr Walsh chaired the building society’s board in 2008 when it approved the €1 million bonus to chief executive Michael Fingleton.
The bonus was paid in November 2008, less than two months after the Government created the guarantee, designed to save the banks from collapse.
Irish Nationwide’s board granted Mr Fingleton extensive powers to run the lender, which he managed for 37 years. He resigned two months after Dr Walsh’s departure. Dr Walsh told The Irish Times in 2010 that it wasn’t true to say that Irish Nationwide did not operate an effective board.
Irish Nationwide has been merged with Anglo Irish Bank and the enlarged institution is being run down under a new name, Irish Bank Resolution Corporation.
