Flynn paid €240,000 compensation

The former chairman of Bank of Scotland (Ireland), Phil Flynn, was paid €240,000 last year as compensation for loss of office.

Mr Flynn resigned in February 2005 after a Garda money laundering investigation involved raids on a Munster company with which he was associated.

At the time, Mr Flynn said: "I am guilty of no wrongdoing, but the bank and I have decided that it is best I step down from my position as non-executive chairman with immediate effect in order to ensure Bank of Scotland (Ireland) is not affected by recent publicity."

The Garda conducted raids on Chesterton Finance Ltd and on Mr Flynn's home as part of its inquiry into alleged money laundering by the IRA. Mr Flynn was a director of Chesterton. No charges have been brought against Mr Flynn arising from the inquiry.

The accounts for Bank of Scotland (Ireland), for the 2005 year, were filed recently in the Companies Registration Office. They include a €240,000 compensation payment for loss of office. Mr Flynn was the only person to resign from the board during the year. Mr Flynn would not comment yesterday. The bank's chief executive, Mark Duffy, said he could not comment for confidentiality reasons.

The accounts state that directors' emoluments for the year were €3 million. There were four executive directors on the board during 2005. They were: Mr Duffy; Joe Higgins; Richard McDonnell, and Henry Slowey.

At the year's end, five directors had loans from the bank totalling €4.3 million, up from €542,000 at end 2004. Non-executive directors get loans on commercial terms while executive directors get loans on the terms available to other employees of the group.

The accounts state the profit on ordinary activities before tax was €157 million, up from €152 million in 2004. Bank of Scotland (Ireland) is owned by HBOS plc, which announced its results earlier this month and gave figures for the Irish operation.

The accounts show that Bank of Scotland's (Ireland) loans and advances to customers increased 39 per cent, to €17.5 billion, during 2005.

Net interest income grew by 26 per cent, to €293 million. The net interest margin declined to 1.77 per cent, from 2.01 per cent. This is the margin between what the bank pays and the bank receives, in interest.

The 24 basis points drop in the margin was attributed in the accounts to: change in product mix (nine); mortgages (two); business banking (seven), and funding and other movements (six).

The notes to the accounts state the "principal factors behind the reduction in net interest margin were the change in product mix driven by our retail expansion and the full-year impact of the inclusion of the Irish mortgage portfolio, which transferred from the UK retail division in July 2004. As expected, margins in our business banking market narrowed in the fact of tougher competition."

During 2005, the bank purchased a branch network from the ESB. The accounts state it is intended to open 46 retail branches by early 2007.

Staff costs in 2005 were €83.4 million, compared to €65.5 million in 2004. Staff numbers grew to 919, from 717.

Included in the wages costs was €2.4 million associated with the voluntary severance scheme and early retirement plan arising from the merger of ICC Bank and Bank of Scotland (Ireland).

Mortgage loans to individuals increased to €4.5 billion, from €3 billion, according to the accounts. Net loans increased to €17.5 billion, from €12.6 billion.

In February 2005, Mr Flynn resigned from the board of Bank of Scotland (Ireland) and the VHI, and also as head of the Government's decentralisation programme. He continues to carry out work for An Post.

Mr Flynn was vice-president of Sinn Féin in the mid-1980s.