FORMER FINNISH civil servant Peter Nyberg has been appointed by Minister for Finance Brian Lenihan to lead the commission of investigation into the banking crisis.
The Minister said he and his officials would be available for questioning by the commission.
Mr Nyberg, a former director general for financial services at Finland’s ministry of finance, had the necessary experience to undertake the role and would be supported by the expertise he required, Mr Lenihan said.
His role in managing Finland’s banking crisis of the early 1990s was among the reasons he was chosen to lead the investigation.
Finland fell into a deep recession in 1990 due to the removal of bank borrowing controls and excessive foreign borrowing. Its economic output fell 14 per cent and unemployment climbed to almost 20 per cent.
At the time Mr Nyberg advised the board at the Bank of Finland, with responsibility for banking crisis resolution proposals. Before this he worked at the International Monetary Fund during the mid-1980s. He retired from the Finnish finance ministry last month.
The commission, whose remit has been extended to include the events leading up to the nationalisation of Anglo Irish Bank on January 15th last year, has six months to report back to Government. Mr Nyberg can employ other professionals. The Government has allocated €1.8 million for the investigation and Mr Nyberg is expected to earn €120,000, in line with salaries earned by senior counsel for tribunal work.
This is twice the sum earned by banking experts Klaus Regling and Max Watson for their report on the crisis published last month.
As part of his investigation, Mr Nyberg will have powers to seek information from the banks.
Mr Lenihan characterised the failures in governance and risk management at the banks as disastrous, leading to systemic difficulties in the financial system. “What went on in the banks leading up to the crisis remains a cause of significant public concern,” he said.
There were serious failures in governance and risk management at Anglo Irish Bank and Irish Nationwide, he said. “There is a clear need to examine more deeply and broadly what went wrong in those two organisations.”
Mr Nyberg is a respected authority on banking in Finland. A former colleague said he did not give up easily, once he has made his mind up. He has a PhD and has published several papers on the Finnish banking crisis.
In a 1997 research paper he recommended that only “viable banks with fit and proper governance” should be supported and that bank support should be constrained “by the need to safeguard government creditworthiness”. He has recommended that creditors share substantial losses in a bank failure.
