Dr. Laurence Crowley:

Okay, thank you. Mr. Chairman, I have provided a written statement to the inquiry on the topics you raised with me and I would like this morning to make a few general points.

The first, and to me the most important point, I would ask the inquiry to bear in mind that my role as non-executive governor or chairman of Bank of Ireland ended in July 2005, just under ten years ago and I have absolutely no involvement with the bank in the intervening decade. Whilst I am anxious to assist the inquiry as much as I can and do not wish to appear in any way unhelpful, the truth is my recollection of events, of meetings and correspondence is significantly impaired by the passage of time. It happens to all of us and I trust the inquiry will understand and accept this. I note that a lot of the documents you have sent me relate to periods after I left the bank and I hope you will appreciate that I am not in a position to comment in any way on these documents.

The second point I would like to make concerns the standards of governance and oversight in the bank during my time there. Most of the board, including myself, were non-executive and therefore part-time. It is not the job of non-executives to run the bank nor are they or can they be expected to know everything that is going on in the bank. Their role is an oversight one, to approve strategy and general direction and to be satisfied that there are proper governance structures in place. In looking at historical practices, whether in banking or anywhere else, I believe that these practices should be judged against the standards of best practice which existed at that time. There is no doubt that corporate governance has evolved significantly over the last decade, both generally for public companies and specifically for financial institutions in the light of the financial crisis but in my view, a fair assessment of practice in the past requires them to be judged in the context of standards of best practice at the time concerned.

I believe that the structure which was in place in Bank of Ireland during my time there reflected best practice and I have summarised the main control processes which existed in my written statement. I had no cause for concern about the adequacy or appropriateness of the reporting and the accountability structures which we benchmarked against practice at the time, with the help in particular of our internal auditors and our external auditors.

In relation to the strategy of the bank approved by the board in 2002, it is clear that this was an ambitious growth strategy.

It must be viewed, however, in the context of the economy at the time which was growing rapidly and with all indications pointing to a long period of sustained growth. What is also important to note is that the strategy was not reliant on property lending. My recall is that the growth in the balance sheet was to be achieved through a combination of acquisitions, particularly in life and pensions businesses, and through managing the capital of the bank through share buy-backs and other mechanisms. We were particularly focused on growing the business outside Ireland and that was largely why we recruited a CEO who had been working abroad. My understanding from reading the materials you have sent to me is that, in fact, property lending did not grow in a disproportionate fashion compared to other lending in Bank of Ireland and this would be what I would have expected from my experience there.

In my written statement in relation to the subject of property lending, I say that I do not recall any issue of imprudent lending being brought to the board. I understand that this statement by me has been put to one of the other witnesses. I was not intending to suggest that executives were aware at the time of imprudent property lending and chose not to bring it to the board. I'm completely satisfied that this is not the case. There was always open dialogue between the board and the executives and I have no doubt that if there was a material issue relating to property lending, the board would have been informed. Of course, the board were aware that the bank, like all banks, had bad debts and I recall that the bank was conservative in making provisions for bad debts. While some of the bad debts may well have related to property lending, I have no reason to believe that this was a result of imprudent or reckless lending.

Finally, in relation to property lending, I've seen references to the establishment of a specialist property group in the bank in late 2004, the implication being that this is evidence of a decision to place a particular emphasis on property lending. I don't believe that the reason for the decision was to significantly increase the level of property lending. It was part of a move towards specialisation, where individual lenders would focus on particular areas, rather than have someone who might be lending to a property developer in the morning and a grocer in the afternoon and I believe that this was a sensible approach.

Can I conclude by coming back to what is the role of a director? For as long as I've been involved in business, it has always been the case that the primary duty of a director is to act in good faith in what he or she honestly believes is in the best interests of the company involved. I understand that this principle has now been enshrined in legislation in the new Companies Act, recently passed by you and your colleagues in the Oireachtas. I genuinely believe that everything I and other directors of Bank of Ireland did during my time was done in good faith in what we believed was the bank's best interests. I believe we discharged our responsibilities to the best of our ability. When, as I was leaving ... when I was leaving the bank in 2005, it was operating in a very strong economic environment and there were no signs that the bank would do anything but go from strength to strength. If, with the benefit of hindsight, decisions taken during my time later contributed to the problems facing the bank, then this is clearly something I regret. Thank you.