Banking inquiry told Bank of Ireland did not lend recklessly

Bank of Ireland did not lend excessively or recklessly for property, the banking inquiry has heard.

Richard Burrows, who was governor from 2006-2009, said the institution was professional in all lending practices.

However, he said: “In relation to the property lending, that was the big factor that caused us enormous difficulty within Bank of Ireland, which required the government intervention that we did get.”

Another former governor Laurence Crowley, who was with the bank until 2005, said property lending did not grow disproportionately in comparison with other banks.

Mr Crowley told the Oireachtas banking inquiry the bank’s strategy was not reliant on such lending during his time at the institution. He said: “I do not recall any issue of imprudent lending being brought to the board.”

Essential

Mr Burrows insisted property lending was always in the best interest of the bank.

He also said he agreed with the position of current Bank of Ireland chief executive Richie Boucher that the establishment of Nama was essential.

Mr Burrows said: “It was a very important element in a package of measures designed to make sure the banking system survived.”

Asked if he was surprised about the 43 per cent discounts on loans transferred from the bank to Nama, Mr Burrows declined to comment.

He said it was inevitable there would be discounts but it would be inappropriate for him to express a comment on whether it was appropriate.

Mr Burrows said this would only become clear when the loans were sold by the agency.

The former governor said the power of negotiations always lay with Nama and not with the banks trying to offload the loans.

Mr Burrows was also asked about warnings from Professor Morgan Kelly who predicted the economic crash. He said he had read the articles that had an “interesting angle” but the bank had chosen to listen to the flurry of opinion pointing in a different direction.

“We should have paid more attention; we took the opinion of other experts and we decided that is what we would listen to,” he said.

Apology

Asked by Labour Senator Susan O'Keeffe should he apologise, Mr Burrows said: "I was very clear at the time that I had apologised very comprehensively to shareholders, to people within Bank of Ireland and to the Irish taxpayer. I put on record our appreciation at what government had done."