Written answers

Thursday, 15 November 2012

Department of Finance

Banking Sector Staff

Photo of Robert TroyRobert Troy (Longford-Westmeath, Fianna Fail)
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To ask the Minister for Finance his plans to review the remit of the public interest directors in the State supported banks; and if he will make a statement on the matter. [50508/12]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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As I detailed in the answer to question numbers 167, 168 and 172 which were taken together on 9 October 2012, the legal position is that any director appointed to the board of the covered institutions whether under the Credit Institutions (Financial Support) Scheme 2008 or otherwise is subject to the requirements of company law in relation to the discharge of their responsibilities as a company director. As such, the director is legally bound to act in what he or she believes are the interests of the separate legal entity that is the institution itself. These are the directors so called fiduciary responsibilities. To address the scope for actual and perceived conflicts between the fiduciary duties of the directors of financial institutions under company law and the wider public interest in circumstances where those institutions have received huge financial support from the State, legal clarity, not just to the role of the public interest director but to that of the entire boards of those institutions, was provided under Section 48 of the Credit Institutions (Stabilisation) Act 2010. It provides that the overriding duty of directors of the covered institutions relates to the public interest as set out in the Act. Accordingly, public interest directors do not have a formal reporting relationship to the Minister or to the Department of Finance. As the Deputy will be aware, the terms of the Relationship Frameworks with AIB, Bank of Ireland, IBRC and Permanent TSB set out the form of the on-going relationship between the State and these institutions. We have been operating under these framework agreements since March 2012. Any changes to the Relationship Frameworks would require the approval of the Competition Division of the European Commission.

As Minister for Finance, I am strongly committed to ensuring that the boards of the covered institutions act at all times in a manner fully consistent with key public interest objectives for the banking sector.

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