Former Irish Nationwide Building Society (INBS) managing director Michael Fingleton "was not a fan of the idea of establishing a committee to deal with bad-loan provisions ", a public hearing was told on Friday.
But, said former financial controller Vincent Holohan, he "knew he had to move with the times".
Appearing before the Central Bank’s inquiry into alleged regulatory breaches at the building society in the years before the financial crisis, Mr Holohan said meetings of the provisions committee, which were usually chaired by Mr Fingleton, were generally “uneventful”.
“The dynamic of the meetings was Mr Fingleton asking questions of particular individuals and them responding to him. The meetings were brief enough. Stuff was gone through but there wasn’t a lot of group discussion with people chipping in,” he said.
KPMG letter
The former financial controller, who worked for INBS for 32 months between 2003 and 2005, said the decision to establish the provisions committee came following a letter from auditor KPMG in December 2003.
“The provisions committee came about because of the KPMG letter. There were very few meetings and my view is that, without that letter, it wouldn’t have come into existence,” said Mr Holohan.
Mr Holohan, who was secretary at the meetings, said that when he joined the organisation “there was a perception that Mr Fingleton had mellowed”. However, he added “people knew what they had to do”.
The Central Bank inquiry is seeking to establish if Mr Fingleton and three other former managers were involved in seven so-called contraventions at INBS between August 2004 and September 2008.
The others are former INBS finance director John Stanley Purcell, one-time commercial lending manager Tom McMenamin and Gary McCollum, who once led the society's UK lending activities from Belfast.
Mr Fingleton is representing himself.
Mr Holohan admitted the minutes he took at the various meetings were “businesslike” and focused on decisions taken rather than any possible discussions around issues.
“I like to think I didn’t leave out anything important,” he said.
Cross-examining the former financial controller, Mr Fingleton asked him on a number of occasions if it was possible that documents, including some from KPMG, could have been circulated at committee meetings without being recorded in the minutes.
The inquiry's three-member panel, led by chairwoman Marian Shanley, intervened to advise Mr Fingleton that if he was trying to make a case that letters from the auditor were circulated at meetings, he should make his case immediately.
“What I’m trying to establish is if other documents could have been circulated or if contributions were made by the other members of the committee,” said Mr Fingleton in response.
The first module of the inquiry, which has been postponed a number of time, is looking at whether the society’s credit committee failed to adhere to internal policies by not reviewing cases of large commercial loan arrears, exposure to specific sectors or customers, or issues raised by internal audit, outside advisers or regulators.
Home loans manager
Earlier on Friday, INBS’s one-time home loans manager Darragh Daly appeared again before the inquiry.
Mr Daly, who earlier in the week described his engagements with Mr Fingleton as being typically “terse”, said his role on a credit committee, which reviewed loan applications, was a “supportive” one only, given that he had no background in commercial lending.
“I felt my appointment was to assist and support commercial lenders as they saw fit,” he said.
The one-time INBS employee, who later became head of credit risk, served on the credit committee between February 2005 and July 2016.
He told the inquiry on Friday that it was clear his role included responsibility for implementing recommendations from KPMG and that the board was aware of this.
Mr Daly added that, while the credit committee met only sporadically and on no more than on 10 occasions, it had a significant role in the building society.
“Everything was commercially focused. Residential was seen as a necessary evil and something that was expensive. Commercial was where the money was made and the profits generated,” said Mr Daly.
The inquiry resumes on Tuesday with former head of home loans, Brian Fitzgibbon, appearing.
