THE FINANCIAL Regulator is investigating Anglo Irish Bank, examining loans to its directors, including Sean FitzPatrick who resigned last night as chairman.
Mr FitzPatrick resigned over the temporary transfer of €87 million in loans between the bank and Irish Nationwide Building Society over an eight-year period.
The regulator sent inspectors into Anglo's headquarters on St Stephen's Green in Dublin earlier this week to examine the bank's loans to directors. The regulator said that loans to Anglo directors "remain under investigation".
Mr FitzPatrick agreed to resign after it emerged - following inquiries by the regulator - that he had temporarily transferred loans with Anglo to Irish Nationwide, prior to the bank's year-end at September 30th over a period of eight years until September 2007. The loans were later transferred back to Anglo after the year-end date.
Transferring the borrowings between lenders over the year-end meant the loans were not disclosed in the bank's annual report.
Mr FitzPatrick said that the transfers were his "own initiative" and that his decision to resign was taken "in the best interests of the bank and all of its stakeholders".
In one of two statements released by the bank last night, Mr FitzPatrick said: "The transfer of the loans between banks did not in any way breach banking or legal regulations. However, it is clear to me, on reflection, that it was inappropriate and unacceptable from a transparency point of view."
Lar Bradshaw, a non-executive director, also resigned from the Anglo board last night as one loan he held jointly with Mr FitzPatrick was transferred prior to year end. The bank said Mr Bradshaw was "unaware" of the transfer.
The bank said all other directors have confirmed that they have not engaged in similar loan transfers or in "any other inappropriate action in relation to their loans".
"The board of directors has decided to initiate a formal review of governance including policy and practice relating to the directors loans. This review will be carried out using independent expertise," the bank said. "It is important to state that the annual reports of the bank for each of the years in question represent a true and fair view of the bank. The disclosures in each of the annual reports were in full compliance with Companies Act requirements."
The transfer of Mr FitzPatrick's loans was discovered by the regulator during an inspection of Irish Nationwide in January.
Mr FitzPatrick has also resigned from the boards of Smurfit Kappa, Aer Lingus, food group Greencore and investor, Gartmore Irish Growth Fund.
Mr FitzPatrick has been replaced as Anglo chairman by Donal O'Connor, a former managing partner of PricewaterhouseCoopers and a non-executive director of the bank since June.
