FORMER IRISH Nationwide Building Society (INBS) chairman Dr Michael Walsh has told Minister for Finance Brian Lenihan he was referring to the importance of the bank guarantee scheme when stating in a letter to the INBS board claiming that the society “cannot survive” without significant Government support.
Mr Lenihan last night said he wished to state in the strongest possible terms that INBS has all the necessary Government support it needs to conduct its business as set out in a business plan sent to the Department of Finance under the terms of the guarantee scheme introduced in September.
Dr Walsh resigned last Tuesday as chairman of the society, which has been embroiled in the Anglo Irish Bank directors’ loans affair at a time when its trading position is under pressure from the heavy exposure of its loan book to the decline of the Irish and British property markets.
In the first of two resignation letters to the INBS board, both of which were reported yesterday in The Irish Times, Dr Walsh said that “in the light of unfolding events at Irish Nationwide and my responsibility as chairman of the society, I believe that the board and ultimately the Minister should have an opportunity to provide new oversight and leadership.”
His second letter said: “It is clear to me that Irish Nationwide Building Society cannot survive without reorganisation and significant Government support.”
Mr Lenihan yesterday met INBS chief executive Michael Fingleton and acting chairman Terence Cooney at their request following publication of Dr Walsh’s letters, which were forwarded to the Financial Regulator and the department. They agreed that only the Minister would make a statement afterwards.
Mr Lenihan’s statement said: “The Minister notes today’s report in The Irish Times suggesting that Dr Michael Walsh believes Irish Nationwide Building Society requires significant Government support. Dr Walsh has informed the Minister that his reference to Government support was in fact a reference to the importance of the Government guarantee.”
Mr Lenihan said he wished to stress that the guarantee remains in place. As announced last week, he added, the Government will examine how the scheme could be revised subject to European Commission approval and consistent with EU state aid requirements in ways that include supporting longer-term bond issuance by the covered institutions.
“This would be in line with international and EU trends where the average term of State cover for bond issues extends beyond 2010,” he said. “The board has confirmed to the Minister that in line with its business plan, the society has made significant progress in strengthening its management and organisation.”
The INBS spokesman said: “The society has nothing further to add to the statement issued by the Department of Finance this evening.” The board on Wednesday said there were no commercial issues which would have impacted on Dr Walsh’s decision to resign. Dr Walsh was unavailable for comment last night.
