Mick Wallace (Wexford, Independent) | Oireachtas source

Yes. As I have 30 minutes, I was thinking of doing so at 3.30 p.m.

The European Central Bank and European Union have inflicted a huge injustice on Ireland. Sadly, the Minister for Finance now wishes to compound it by getting Ireland to co-operate with the single resolution board, which wishes to continue the current practice of regulating banks even though it is aware that banks are hiding losses from the regulator. Patrick Honohan has confirmed at various times that banks have hidden losses and also confirmed that it is difficult for regulators to ensure that banks are safe.

It now is well recognised that the ECB was a major contributor to Ireland's banking crisis. In 2001, the ECB knew that banks were about to start hiding losses yet it simply stood aside to please bonus-hungry bankers, allowing them to amass substantial bonuses while destroying economies like Greece and Ireland. Members should not allow this to continue. In 2001, the ECB was aware that banks were going to hide losses but did nothing about it. It stated: "This approach would allow two criticisms associated with the current accounting standards to be overcome, notably that potential credit losses remain hidden until signs of deterioration are evident and that market participants have insufficient information about the interest rate risk profile of banks." In 2006, the ECB reconfirmed that the amortised cost system of accounting allowed banks to delay the recognition of losses. It stated "given that these assets could be accounted for at amortised cost – the actual recognition of a loss or an impairment of the assets may take longer to materialise". In 2001, the ECB and the European Union received warnings from a consortium of French banks and bank regulators that carnage would result. Does the Minister of State agree with the local authority pension fund in London which stated that financial statements of banks and their regulation must be comprehensively reviewed?

Its report stated:

The forum’s analysis as set out in this publication leads to some radical conclusions, not least the need for a comprehensive review of financial reporting where we believe there are significant deficiencies. Yet, in reaching this view, we are driven solely by a desire to understand how major financial institutions appeared, on paper, to be solvent at one moment, only to require enormous taxpayer support at the next, just to survive.

Mr. Michael Buckley, a former chief executive of AIB, told the banking inquiry that 99% of bankers knew that the practice of hiding losses would cause difficulty. Mr. Buckley is not alone in this view. Bank of Ireland also knew that the rules were a disaster. Its former group chief financial officer, John O'Donovan, stated:

Once the EU adopted IFRS and by extension IAS 39, Bank of Ireland had no choice, as a listed entity, but to apply the new standard. Bank of Ireland understood the pro cyclical nature of loan loss provisioning under IAS 39, was not entirely comfortable with its outcomes but there was nothing the Regulator/Central Bank or indeed the Court or management of Bank of Ireland could do to change what had been adopted by the EU.

The list of those criticising banks for hiding losses is never-ending. Even the Chartered Accountants Regulatory Board confirmed that its members were hiding losses and, therefore, not showing the financial position correctly.

In April, I tabled a question to the Minister for Finance asking for his views on claims by the Chartered Accountants Regulatory Board that accounting standard IAS 39 forces banks to portray an inaccurate financial position. I further asked for his views on his assurances provided in the reply to Parliamentary Question No. 185 of 14 February that banks had not systematically overvalued loans in their published accounts, which could be misleading. I asked the Minister to make a statement on the matter. He replied:

I have answered a number of Parliamentary Questions in the past in relation to rules adopted by banks when valuing assets including loans. These rules are determined by the relevant accounting standards and it is the responsibility of the directors of the respective banks to ensure these rules have been properly applied. To provide assurance that this is the case, the proper application of the rules is subject to an annual independent external audit review.

As I have stated in the past, nothing has been brought to my attention to suggest that these rules have not been correctly applied by the banks.

In February 2014, when Deputy Pearse Doherty asked the Minister for Finance if the Central Bank had ever investigated any bank in the State for hiding losses in its accounts, Deputy Noonan replied: "I have been advised by the Central Bank that the Bank is not in a position to provide me with a response to this question." It is not very satisfactory.

I believe that these statements, along with the Single Resolution Board, are an attempt to protect the bonuses of destructive bankers who have caused such huge losses to the Irish economy. I also have a legal opinion confirming that the practice of hiding losses is a potential criminal offence. I believe that by making misleading statements, the Minister is representing the interests of bankers and their lobby groups.

Speaking of criminal offences, I have just written to the Central Bank to report possible criminal offences under the Market Abuse (Regulations) 2005 by the former NAMA committee member Frank Cushnahan and former NAMA executive officer Ronnie Hanna. Both men were arrested in Northern Ireland last week.

The NAMA code of conduct-----

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