CENTRAL BANK deputy governor Matthew Elderfield has said there is a “severe downside” to regulating interest rates and that it could deter investors buying into Allied Irish Banks as the State seeks to sell down its stake.
He told an audience of accountants that the Central Bank’s legal costs would increase next year as the regulator takes on big enforcement cases, but he hoped to recoup these costs through penalties.
The Central Bank’s biggest “themed inspections” will be on mortgage arrears next year, said Mr Elderfield. “This particular exercise is unlike anything we have done on themes in the past.”
Staffing levels will rise to 714 at the end of this year, up from 385 at the end of 2009, he said.
The number of employees would not increase next year, he told the Association of Chartered and Certified Accountants.
Outlining how different-sized financial firms will be regulated, Mr Elderfield said there would be a greater number of reviews, inspections and meetings with companies whose failure would have a bigger impact.
He asked his supervisors to ask “difficult questions, to be sceptical, to challenge established truths and to not necessarily take the first answer they are given”. He wanted them to be assertive which “does not mean rude or aggressive”, he said.
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