Central Bank fines and disqualifies ex-INBS executive Tom McMenamin

The Central Bank has fined Irish Nationwide Building Society's (INBS) former head of commercial lending, Tom McMenamin, €23,000 and barred him from a senior role in a financial firm for 18 years after he admitted involvement in a serious of regulatory breaches in the run-up to the financial crisis.

Mr McMenamin, who is retired, would likely have been deemed bankrupt had it imposed a €250,000 fine that it believed the breaches merited, the regulator indicated in a statement on Tuesday. It is prohibited by law from levying a monetary penalty that would result in a person’s insolvency.

Mr McMenamin was one of four senior executives at INBS who have been subject to an ongoing public inquiry into matters at INBS between August 2004 and the end of September 2008, when the State was forced to step in and guarantee its six main lenders.

Bankrupt

Mr McMenamin has admitted to participating in multiple breaches of financial services law by INBS, including not properly documenting commercial loan applications, not following loan approval processes, and not following processes relating to the size of loans relative to a property’s value, the Central Bank said. Other violations included not monitoring commercial loans and the failure of the company’s credit committee to discharge its functions.

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The size of INBS’s commercial loan book more than doubled in the four years to the end of 2008, by which stage it accounted for almost 80 per cent of the group’s total €11 billion portfolio.

"These failings demonstrate a serious lack of due skill, care, diligence and competence in carrying out his role as the most senior manager of commercial lending in Irish Nationwide Building Society for the Republic of Ireland," said Seana Cunningham, the Central Bank's director of enforcement. "He failed to discharge his responsibilities in the day-to-day management and operation of the commercial lending function and disregarded requirements for commercial loans to comply and adhere to INBS' policies on commercial lending and credit risk."

INBS cost Irish taxpayers €5.4 billion in bailouts before its assets were merged with fellow-failed lender Anglo Irish Bank in 2011 to form Irish Bank Resolution Corporation (IBRC). IBRC was subsequently put into liquidation two years' later.

Inquiry

The Central Bank decided in 2015 to set up a public inquiry into the actions of Mr McMenamin, INBS's long-standing managing director Michael Fingleton, its one-time finance director John Stanley Purcell, and former head of UK lending, Gary McCollum.

Some 26 witnesses gave evidence at public hearings between last December and June as part of the first phase of the inquiry, concerning the workings of INBS’s credit committee. However, it emerged in October that public hearings had been delayed since the summer due to what the Central Bank referred to as the “illness of one of the persons concerned”, known to be Mr Fingleton (81).

Mr McMenamin conceded to the inquiry in June that the agendas for credit committee meetings were “a sham” and that a number of issues listed for discussion never came up during regular meetings. These included large loans in arrears, reports on sectoral concentration, as well as issues raised by internal auditors, outside advisers or regulators.

This settlement concludes the Central Bank’s inquiry into Mr McMenamin. The regulator said it has no effect on the ongoing inquiry into other persons concerned with the management of INBS.

A fifth man, former INBS chairman Michael Walsh, reached a settlement with the regulator last February, in which he was fined €20,000 and banned from managing a regulated financial firm for three years. He admitted his ultimate responsibility for certain breaches, even though he was never involved in INBS's day-to-day management.