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Committee of Inquiry into the Banking Crisis: Nexus Phase (29 Apr 2015)

Sean Barrett: Mr. Forde told us that the threshold submission to the group credit committee for loan approval was raised from €40 million in 2005 to €75 million in 2006. That's an 88% increase. Did that indicate that this ... we were getting out of touch with ... a property bubble ... to raise the threshold by 88%?

Committee of Inquiry into the Banking Crisis: Nexus Phase (29 Apr 2015)

Sean Barrett: Could I draw attention, Chairman, to B1, Vol. 1, page 62? There's increase in exposure to a company from €789 million to €991 million where the large ... the group large exposure policy limit was €150 million. So the increase alone at one board meeting was greater than the limit and the eventual ... the new limit was six times what the original one...

Committee of Inquiry into the Banking Crisis: Nexus Phase (29 Apr 2015)

Sean Barrett: Yes. The name is redacted. Do we know if this one went to NAMA?

Committee of Inquiry into the Banking Crisis: Nexus Phase (29 Apr 2015)

Sean Barrett: The decision to pay the dividend of €270 million on 26 September 2008 ... that seems incredible in retrospect.

Committee of Inquiry into the Banking Crisis: Nexus Phase (29 Apr 2015)

Sean Barrett: Could I just return, finally, Chairman, to B5 on page 5? It's a question on which Deputy O'Donnell has raised but these references are a year later and a year closer to the crisis. The payment to the four executive directors was €6.4 million, of which yours was €2.1 million. Was there still no evidence that this was a banking model which was going to cost the taxpayers a lot...

Committee of Inquiry into the Banking Crisis: Nexus Phase (29 Apr 2015)

Sean Barrett: This is '07. The document is B5 and the page number is five. And the payments ... the total are Mr. Doherty, €1.663 million; Mr. Forde, €1.394 million; Mr. O'Donnell, €1.273 million; and Mr. Sheehy, €2.105 million. And the total, €6.435 million.

Committee of Inquiry into the Banking Crisis: Nexus Phase (29 Apr 2015)

Sean Barrett: Thank you very much. Thank you, Chairman.

Committee of Inquiry into the Banking Crisis: Nexus Phase (29 Apr 2015)

Sean Barrett: Thank you, Chairman and again welcome to our visitors. Was it ever discussed that you might go the ECB or consult Mr. Trichet in relation to these difficulties?

Committee of Inquiry into the Banking Crisis: Nexus Phase (29 Apr 2015)

Sean Barrett: And the crisis hadn't developed at that stage?

Committee of Inquiry into the Banking Crisis: Nexus Phase (29 Apr 2015)

Sean Barrett: But having broken the ice, so to speak, it didn't arise that you would, in the critical week, involve him?

Committee of Inquiry into the Banking Crisis: Nexus Phase (29 Apr 2015)

Sean Barrett: Okay, thank you. On B3, Vol. 1, page 6, there's material from Mr. Treble who was looking at the loan-to-deposit ratio going up to 157% at the end of 2006, which would brought you second only to HBOS, and that is a more risky form of banking than relying on deposits and, in the same volume he said that targets were set not to go to 157% but to be less than 134% at the end of 2006. And the...

Committee of Inquiry into the Banking Crisis: Nexus Phase (29 Apr 2015)

Sean Barrett: Okay, thank you on that. Now, there was .... for Mr. Buckley ... this is the last one, thanks very much, Chairman. The organisation ... On page 4 of your speech, Mr. Buckley: "The organisational reshaping involved centralising as much as positive routine transactional and processing services out of branches, it involved creating a centralised mortgage processing and decision-making centre"....

Committee of Inquiry into the Banking Crisis: Nexus Phase (29 Apr 2015)

Sean Barrett: B2, Vol. 1, page 8, if it comes up on your screen.

Committee of Inquiry into the Banking Crisis: Nexus Phase (29 Apr 2015)

Sean Barrett: Maybe I got the lucky one .... yes, B2, Vol. 1, page 8-----

Committee of Inquiry into the Banking Crisis: Nexus Phase (29 Apr 2015)

Sean Barrett: Well he does say: '"This could lead to the bank missing-----

Committee of Inquiry into the Banking Crisis: Nexus Phase (29 Apr 2015)

Sean Barrett: It's B2, Vol. 1.

Committee of Inquiry into the Banking Crisis: Nexus Phase (29 Apr 2015)

Sean Barrett: Except that NAMA also found it a problem much later. Thank you very much. Thanks Chairman.

Committee of Inquiry into the Banking Crisis: Nexus Phase (29 Apr 2015)

Sean Barrett: Thank you, Chairman, and you are very welcome. Just to explore with you the transition to "boring utility banking" as you call it, what loan-to-deposit ratio would you have in mind to illustrate success in that regard?

Committee of Inquiry into the Banking Crisis: Nexus Phase (29 Apr 2015)

Sean Barrett: And on the property concentration, I think that went to 390% when combined with development and the target was 250%, so again it's a ratio where AIB was out of line before the path to boring utility banking. So, what have you got in mind for that particular one?

Committee of Inquiry into the Banking Crisis: Nexus Phase (29 Apr 2015)

Sean Barrett: Has the function of internal audit strengthened since you've come in? Because I see, in the 2006 report it says that when they examined the independent valuation they found that 13 of 25 cases tested were without valuations. One in particular, Glencairn Homes, was for €93 million. So have you tightened valuation procedures in line with what the internal auditor found?

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