Ms Ethna Tinney:

In the period from mid-2005 to April 2007, I was inundated via e-mail by proposals from EBS senior management on behalf of developers for quantities of cash in the tens of millions which appeared to be asset-backed and also to contain personal guarantees. Typically, as a member of the credit committee, your approval or lack of it had to be sent also by e-mail to EBS by close of business the same day or the next day. The rationale was that if EBS did not facilitate the developer, another bank would and we would simply be losing out on the business. All these proposals seemed fail-safe. It did occur to me many times that the EBS credit committee should be meeting about each of these large proposals but my colleagues on the committee seemed happy to do the business this way, and as I had clashed with the majority of the board over several matters at this stage I had no appetite for further confrontation.

To adequacy of the incentive and remuneration arrangements to promote sound risk governance: the bonus system in banks is crazy. You get a bonus for lending money out. There is no incentive to get it back in. Such a system encourages greed and recklessness. It is no wonder that banks go bust from time to time.

To appropriateness of the bank guarantee decision: probably until the last syllable of recorded time, this will be argued by politicians, economists and journalists. My personal view as a citizen of the Republic of Ireland, perhaps to some extent influenced by hindsight, is that it was indefensible for the Government in September 2008 to in effect yield the sovereignty of this country in order to shore up a banking system that is entirely of and for itself and will never change. I do accept, however, that many grave problems would have arisen if one or more banks had failed and that the full extent of the bad debts were not known at the time.

To analysis and consideration of the response to contrarian views: I incorporate below in italics a letter I insisted on sending to the members of EBS in advance of the annual general meeting in 2007, 29 March that year:

Dear Member,

Your EBS 2006 Summary Statement contains on the Notice of Annual General Meeting the following words:

“Ethna Tinney retires in accordance with the Society’s Rules and offers herself for re-election. (Members should be aware that the Society’s Board of Directors does not support Ms Tinney’s re-election as a Director)”

There are three reasons why the Board does not support my re-election.

In the years 2003 and 2004 the Board was intent on pursuing a deal with a foreign bank. This deal was characterised by the executive as a bold transformational play. I saw it as selling the family silver without giving the money to the family - you, the members. I opposed the deal from first to last. Ultimately the deal collapsed, but not before millions of euro of your money had been spent pursuing it.

In 2005 the Society advertised for new non-executive directors. I was a member of the Nominations Committee. Ten candidates were shortlisted through an external recruitment process. All ten were vetoed without any reference to me. I objected in the strongest possible terms. Last December I was removed from the Nominations Committee.

In 2006 the Board fractured over corporate governance. Three members, including me, became unhappy about aspects of senior executive remuneration and the payment of a multi-million euro sum into the Senior Manager’s Pension Fund without reference to the Board.

Am I right or wrong to oppose matters which appear to me to be against the interests of you, the members? If you believe that independent judgement exercised without fear or favour is a good thing on your Board then come to the AGM on April 16th or send your proxy to arrive not later than April 9th at EBS Building Burlington Road Dublin 4 and re-elect me.

This letter does not mention that I had repeatedly raised concerns about the size of mortgages we were lending to people. Nor does it detail my explosive response at a meeting in early 2007 to a proposal by the executive to get involved in sub-prime lending. A non-executive director colleague told me in front of the board that my response was “intemperate”, although the sub-prime industry in the US was already beginning to implode. Contrarian views were not tolerated on the board of the society.

To appropriateness of the relationships between Government, the Oireachtas, the banking sector and the property sector: I have never had a relationship with any member of the Government nor the Oireachtas nor the property sector. I do not golf, do not visit tents at racecourses and am not invited to dinners. But my sense, as a citizen of Ireland and as a director of EBS for nine years, is that there is a deeply unhealthy relationship between all four.

In conclusion, I wish to emphasise that this witness statement refers specifically to my time as a non-executive director on the board of EBS in the period December 2000 to April 2007 when I was removed from it. By the time I was re-elected onto it in 2008 there had been many changes to its composition and a new chief executive officer had been appointed. Sadly, it emerged during the next three years that EBS was irrecoverable. I retired from the board at the end of my third three-year term in May 2011.