Regulator introduces new rules for directors' loans

The Financial Regulator is to introduce new rules for directors’ loans following the discovery of significant director loans at Anglo Irish Bank that were not disclosed to auditors or shareholders.

Under the new rules, which will come into force on March 1st, directors will have to give details of the "maximum amount of loans from that credit institution outstanding at any time" during the financial year, including connected loans.

Directors will also have to give an end-of-year balance for their loans with that bank.

The former chairman of Anglo Irish Bank Seán FitzPatrick resigned in December when it emerged that he effectively hid details of an €84 million debt to the bank from shareholders and had not disclosed loans over an eight-year period.

Once news of the loans emerged it ultimately led to the bank's nationalisation.

Mr FitzPatrick temporarily repaid the debt with loans from Irish Nationwide before the bank's balance sheet date in September, and subsequently drew down the money again from Anglo and repaid the Irish Nationwide loans.

By using this mechanism Mr FitzPatrick diminished the extent of his liability because he was obliged to declare amount he owed on the balance sheet date.

The former Financial Regulator Patrick Neary retired last month following criticism of the Irish Financial Services Regulatory Authority's regulation of the banking sector and its lack of knowledge of the loans to €87 million to Mr FitzPatrick, which ultimately led to the bank's nationalisation.

Mr Neary has been replaced by Mary O'Dea.