It might just have been a coincidence but there was a neat symmetry yesterday between the announcement that AIB’s restructuring plan had been approved by the European Commission and the surprise resignation of John Moran as secretary general of the Department of Finance.
Moran was brought in from outside the department three years ago to bring some fresh thinking to the banking crisis, and he can take credit for what has been achieved since 2011.
He and Minister for Finance Michael Noonan adopted the two-pillar bank strategy involving AIB and Bank of Ireland.
Anglo Irish Bank and Irish Nationwide were bound together under the umbrella of Irish Bank Resolution Corporation, EBS was folded into AIB, and Irish Life was spun out from Permanent TSB and readied for sale to Great-West Lifeco of Canada. Bank of Ireland attracted outside investment, diluting the State’s holding to 14 per cent.
IBRC was liquidated in dramatic fashion last year, while Bank of Ireland received clearance from the commission for its restructuring plan and dealt with the contingent convertibles and preference shares held by the State. The strategic investment fund was also established.
The cherry on the cake was exiting the EU-IMF bailout programme in December without a precautionary credit line.
Yet much work remains to be done to restore the banking sector to full health. Permanent TSB continues to await approval for its restructuring plan. The Irish banks have to navigate tough stress tests by the European Banking Authority later this year. SMEs continue to complain about a lack of finance, while mortgage arrears remain a problem. AIB has yet to repay any of the €20.8 billion in State aid and the strategy behind the third banking force, on which Noonan went public recently, has yet to be articulated.
Moran’s reasons for leaving are not yet clear. Perhaps it was time for a new challenge. The lawyer has moved around quite a bit in his career. Or perhaps, with the troika having left town, the realities of Irish politics began to dawn on him – as evidenced by the ugly horse-trading recently over water charges by Fine Gael and Labour. Either way, his departure might not be as well timed as it appears.
