Results 9,261-9,280 of 27,945 for speaker:Michael McGrath

Committee of Inquiry into the Banking Crisis: Nexus Phase (20 May 2015)

Michael McGrath: Was there any consideration to the fact that it may be an issue of interest to the regulator that one of the main banks in Ireland had, for example, 44% of its non-mortgage related lending in the basket of property and construction?

Committee of Inquiry into the Banking Crisis: Nexus Phase (20 May 2015)

Michael McGrath: Sure, but you could've decided to.

Committee of Inquiry into the Banking Crisis: Nexus Phase (20 May 2015)

Michael McGrath: Well, if you felt it was in the public interest to bring a matter to the attention of the Financial Regulator ... you could argue that it was in the public interest, and certainly of interest to the regulator, to know that at that time Bank of Ireland's exposure to property and construction was so high. That could, at least, have been considered.

Committee of Inquiry into the Banking Crisis: Nexus Phase (20 May 2015)

Michael McGrath: That's what's laid out in the Act. They're your mandatory requirements.

Committee of Inquiry into the Banking Crisis: Nexus Phase (20 May 2015)

Michael McGrath: This was a key element of your audit ... looking at the loan exposures, looking at the adequacy of the provisions being made, the application of the accounting standards and their impact on the true and fair view of the financial statements. I mean, that's the very essence of the audit that you were doing.

Committee of Inquiry into the Banking Crisis: Nexus Phase (20 May 2015)

Michael McGrath: I never suggested it was an obligation. It is a "may". So, the question I put was, was it open to the auditors to bring those matters to the attention of the regulator?

Committee of Inquiry into the Banking Crisis: Nexus Phase (20 May 2015)

Michael McGrath: Yes it was. Thank you.

Committee of Inquiry into the Banking Crisis: Nexus Phase (20 May 2015)

Michael McGrath: Thank you very much. I would like to welcome Mr. Smith and Mr. Fitzgerald here today. Can I just start by asking Mr. Fitzgerald to outline the structure of a typical audit team that you would have led in respect of EBS, and to give us some insight into the level of skill and experience within this group ... and to state your opinion, whether you believe that there was sufficient banking and...

Committee of Inquiry into the Banking Crisis: Nexus Phase (20 May 2015)

Michael McGrath: Thank you. Can I ask, when did EY secure the audit of EBS? When was the first year?

Committee of Inquiry into the Banking Crisis: Nexus Phase (20 May 2015)

Michael McGrath: Mr. Smith, are you aware?

Committee of Inquiry into the Banking Crisis: Nexus Phase (20 May 2015)

Michael McGrath: And when was that?

Committee of Inquiry into the Banking Crisis: Nexus Phase (20 May 2015)

Michael McGrath: Okay. Right up to and including 2008?

Committee of Inquiry into the Banking Crisis: Nexus Phase (20 May 2015)

Michael McGrath: And given that EY had the audit for that length of time, do you think it creates any difficulty in terms of the closeness of relationships, the knowledge that you would have and the fact that working so closely with the same people over a long period of time would have an impact on your independence for example or on the quality of the work being carried out?

Committee of Inquiry into the Banking Crisis: Nexus Phase (20 May 2015)

Michael McGrath: Okay. The final taxpayer bill, as such, for EBS was in the region of €1 billion. Given your knowledge of the accounts of EBS and the business model pursued, can you give us your view on how those losses arose? Were they substantially related to the property and development loan book which was grown considerably since 2005 or how much of it do you believe was mortgage related? Can...

Committee of Inquiry into the Banking Crisis: Nexus Phase (20 May 2015)

Michael McGrath: Okay. The 2008 financial statements, in note 11, do break down the loans and advances to customers and as far as I am aware, that was the first time that there was such a breakdown. For example, the figures that are provided for commercial development finance, home loans, retail, buy-to-let, commercial buy-to-let. I don't see a corresponding breakdown in the 2007 accounts. Would that be...

Committee of Inquiry into the Banking Crisis: Nexus Phase (20 May 2015)

Michael McGrath: So, just to clarify that, additional disclosure in the 2008 financial statements didn't arise from any change in accounting standards, for example. It was a decision made by the directors and supported by the auditors. It wasn’t as a result of any change in accounting practice.

Committee of Inquiry into the Banking Crisis: Nexus Phase (20 May 2015)

Michael McGrath: If you could, please-----

Committee of Inquiry into the Banking Crisis: Nexus Phase (20 May 2015)

Michael McGrath: -----that would be helpful. Just to look at the issue of the losses that did arise. There is a breakdown, as I say. The total loans and advances to customers was about €17 billion across the group at the end of 2008. Home loans, €13 billion. Retail buy-to-let, €1.5 billion. Commercial buy-to-let, €600 million. What’s the difference, just to...

Committee of Inquiry into the Banking Crisis: Nexus Phase (20 May 2015)

Michael McGrath: Okay. And then under, let’s say, property development, commercial is listed at about €1.2 billion and development finance at about €500 million. So, at the peak, EBS’s loan exposure to commercial and development finance was in the region of €1.7 billion to €1.8 billion.

Committee of Inquiry into the Banking Crisis: Nexus Phase (20 May 2015)

Michael McGrath: Is it of that order, as you understand it. And so, then the overall bill for recapitalising EBS is accounted for by heavy losses on the commercial and development finance book but also buy-to-let mortgages, both retail and commercial.