The Tracker mortgage scandal has dragged on for so long it’s easy to forget how and when it all began. But also how it developed.
It emerged last week that the scandal will cost AIB and EBS, both part of the same group, a combined €330 million in fines and compensation payments.
Such a monumental and costly scandal, which essentially took place between 2004 and 2017, should have had direct consequences for some of the bank’s senior echelons and its board of directors during those years. But that’s not how we remember it.
The first problem arose when AIB stopped offering tracker mortgages in 2008, but failed to consider the best interests of its customers, including their statutory rights, according to the central bank’s findings.
Eugene Sheehy was CEO at the time. The bank imploded anyway. He resigned.
Next, the central bank says the AIB failed to reintroduce a prevailing tracker rate until December 2013 — and at that time only on a go-forward basis.
David Duffy joined as CEO in 2011 and stayed on until 2015. Duffy is credited with important work in restoring the bank’s balance sheet.
Fixing AIB was a tall order, but the central bank is pointing out a key mistake on the tracker front during his tenure.
Then, the regulator says, the bank wrongly excluded certain customers’ mortgage accounts from consideration for redress and compensation. They were only recorded in December 2017. Bernard Byrne was CEO from 2015 to 2018.
The central bank’s findings, released last week alongside the fine, are unequivocal about the bank’s failure. AIB was not alone in making these mistakes, and other banks were fined for similar reasons.
This sad chapter ends with the publication and amount of the fine. All but three of the AIB board members were appointed after 2018, and Chief Executive Colin Hunt, who was appointed in 2019, will be happy to bring the saga to a close.
Also, some brokers have said they believe Irish bank share prices could double as interest rates rise. Despite the record fine, it’s not all bad news for the bankers.
Openness needed on Quinn insurance collapse
Quinn Insurance has settled a potential €900m lawsuit against its former auditor PwC, the High Court was told last week. The case concerned the audit of the insurance company’s books at a time when certain assets were being double-pledged as collateral for loans.
That Irish times speculated that the settlement would be in the tens of millions of euros, but no details of the settlement were released.
Once again, the conclusion of a financial issue related to the collapse of the former Seán Quinn empire does not lead to a transparent outcome.
This has happened before in central bank settlements with former directors of Quinn Insurance. But it’s certainly a matter of public interest as the taxpayer had to allocate funds through the Insurance Compensation Fund to allow the collapsed Quinn Insurance to meet claims?
Quinn Insurance went bankrupt in 2011. At that time, the balance in the compensation fund was just 31 million euros. Between 2011 and 2015, the finance minister had to lend the fund 1 billion euros.
By paying a levy on insurance policies, 599 million euros were repaid by the end of 2020. The funds from the PwC settlement are likely to be used to repay the outstanding balance of EUR 610 million.
“Dozens of millions” suggests it won’t pay off that debt. Commercial settlements between two partnerships are private. But when the citizens of the state are on the hook for over a billion euros, people have a right to know what happened.
A look under the lid of Ireland’s gas rationing plan
Germans were advised to prepare for possible gas rationing this winter. The state-owned Russian gas company Gazprom has reduced deliveries to Germany as part of an annual maintenance program on the Nord Stream 1 pipeline.
However, there are fears that this could signal a general slowdown in gas supply, which will prevent German industry from stockpiling gas supplies ahead of the winter.
Perhaps Ireland needs to enact its own gas rationing plan. Every EU member state is required to have an emergency plan in place for major accidents, weather events or anything that could disrupt gas supplies.
Our plan entitled “National Gas Prevention Plan 2018-2022” is interesting reading. First, when there is a gas shortage, a committee like a Nphet for gas steps in.
Power generation plants that rely on gas must all be able to convert to a secondary fuel within 30 hours. They are said to have access to enough secondary fuel to run for five days. After that, who knows?
Protected customers are given preferential treatment. These are defined as households and essential public services such as hospitals, prisons and social services.
It appears that large companies, which consume about 29 percent of our gas needs, are being pushed into the queue. Officers will be authorized to enter private premises of a commercial gas user, such as a B. a factory that has not reduced its consumption and enforce the changes.
Most of the document addresses the supply risk of a weather event or infrastructure issue affecting gas supply. However, a lack of gas for the EU from external sources such as Russia is mentioned.
The document, written in 2017, concludes that, given our supplies from the UK and Corrib, the availability of gas here is unlikely to be jeopardized in such a case.
Hopefully we won’t find out if they’re right.
It’s not hard to break up, but why should EY bother?
Accounting and consulting giant EY is reportedly considering spinning off its consulting business from the rest. This is not the first time that a consulting area in one of the big companies has grown and a separation is in sight.
But history shows that things don’t always go according to plan. Arthur Andersen was one of the top five accounting and consulting firms. It spun off its consulting division, which became the highly successful Accenture.
In 2002, the accounting firm voluntarily relinquished its license as a US chartered accountant after being found guilty of felonies in the audit of Enron.
Although the finding was overturned, it never really returned as a respectable company.
In January 2000, KPMG spun off its consulting business, later called BearingPoint. It expanded worldwide and its US branch incurred large debts through acquisitions.
At one point it had 17,000 employees worldwide – but in 2009 the US company filed for Chapter 11 with $2.3 billion in debt. With 4,500 employees, BearingPoint remains a very large consulting provider in Europe.
It shows that you can never tell how a breakup will turn out.
https://www.independent.ie/business/irish/huge-fine-draws-a-line-under-aibs-330m-tracker-saga-41787964.html High fine draws a line under AIB’s €330 million tracker saga