1 Mar 2009

New bank regulator for Ireland

10:50 am on 1 March 2009

Ireland is to have a new central banking commission and wide-ranging reform of its regulatory system following a series of banking scandals.

In a televised speech from his party's convention, Prime Minister Brian Cowen promised radical reform of the "system and methods of financial supervision and regulation."

He said the new commission would be modelled on the Canadian system and "incorporate both the responsibilities of the central bank and the supervision and regulatory functions of the financial regulator".

There would be tough action against rogue bankers and caps would be put on the salaries of chief executives of banks receiving government aid.

Mr Cowen also said that the government would appoint a new head of banking regulation with an international reputation within this new central banking commission

Last week police and a special white-collar crime unit raided the headquarters of the nationalised Anglo Irish Bank, which has been engulfed by a series of controversies about corporate governance.

Sean FitzPatrick, the former chairman and chief executive of Ireland's third biggest bank, resigned after admitting he had failed to disclose an 87million euro loan by moving it in and out of the bank for a period of eight years.

The bank is also being investigated about a loans-for-shares scandal involving a so-called "golden circle" of 10 clients.

Earlier this month, the chief executive and two senior executives of Ireland's biggest mortgage provider Irish Life and Permanent resigned in a row about multi-billion-euro transfers to Anglo Irish.

Tax rise

The economy dominated his televised keynote address and he said taxes would have to rise.

His government has budgeted spending of 55 billion euros this year, but the maximum expected from taxes is 37 billion euros.

Through a combination of higher taxes and increased cuts in spending, the government plans to restore balance to the public finances by 2013.