The Central Bank today published a new code of practice for banks and building societies governing loans to senior staff.
The code, which was introduced to prevent directors, senior managers and significant shareholders in banks and building societies from abusing their positions, comes in the wake of an investigation into the issuing of secret loans to directors at Anglo Irish Bank.
From next January, loans to related parties shall not be granted on more favourable terms than comparable loans to non-related parties.
Furthermore, loans to directors or significant shareholders which exceed €1 million must have prior approval of the Central Bank.
The code also requires that lending be limited to a percentage of the institution’s own funds, and subject to appropriate and effective management oversight and limits.