Elderfield gives Roux a head start

Cyril Roux, Ireland's financial regulator designate, is said to be a keen chess player. It's a game that requires a strategic nous and this skill could come in handy as he seeks to complete the task of successfully repairing Ireland's financial sector over the next five years.

Much good work on this front has already been done by his predecessor, Matthew Elderfield. The Englishman took the job in early 2010 at a time when the reputation of the sector was in tatters after years of lax regulation. He felt the Central Bank was under-resourced and lacked sufficient skills in key areas to tackle the crisis. He also argued for greater powers of enforcement.

Elderfield was given the extra resources and powers, although some feel that he was a touch heavy-handed with the fines that he dished out to various groups.

He also set out the targets that banks must achieve to deal with their mortgage arrears, under which 75 per cent of those in arrears must be meeting the terms of the solutions that they have agreed with their banks from the first quarter of next year.

It’s an ambitious target that Roux will now have responsibility for enforcing. This will be an early test of his mettle given that Elderfield has warned that sanctions could be applied to banks that don’t meet their targets.

Roux will also have to oversee the latest set of capital stress tests for Irish banks. Again, this will be a tricky exercise as any requirement for the State to add to the €64 billion bailout to date could spook the markets and stall our exit from the EU-IMF programme.

There is also the small matter of the new supervisory regime for euro zone banks, which will dilute the Irish regulator's role and give greater powers to the Frankfurt-based European Central Bank.

Unknown quantity
Roux is something of an unknown quantity. He has excellent academic credentials as a graduate of Harvard and the Sorbonne. His CV includes stints with the French treasury, a decade with insurer Axa, and the past five years as a senior supervisor for the insurance and banking sectors in France.

His appointment continues the recent trend of appointing outsiders to key regulatory roles in the financial sector.

It dashed the hopes of Fiona Muldoon, director of credit institutions and insurance supervision, who has impressed in her role and whom many had tipped to get the nod for the role.

It will be interesting to see if the Frenchman, unlike Elderfield, sees out the full five years of his contract. Let’s hope it doesn’t take him that long to clean up our mess.