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#Bank Reform

# bank-reform - Wednesday 20 April, 2011

Anglo Irish Bank: Our D.I.V.O.R.C.E. is coming through today

Iconic sign removed from front of toxic bank’s Dublin HQ a day after the Nyberg Report on the Irish banking collapse.

# bank-reform - Saturday 14 August, 2010

THE FORMER HEAD of Austrian bank Hypo Group Alpe Adria has been arrested by Austrian authorities investigating the bank’s activities.

Wolfgang Kulterer was the bank’s chief executive during a period of rapid expansion by the bank into the Balkans. Hypo subsequently ran into trouble and was nationalised last December.

Public pressure surrounding the bank’s bailout has pushed police into looking at what went wrong at the bank prior to nationalisation. Authorities are investigating Kulterer for breach of trust and giving false testimony to an inquiry.

Kulterer has previously admitted to covering up losses at the bank and was ordered to pay a fine.

Jorg Haider, the late right-wing governor of Carinthia, Austria, sold a large chunk of the country’s stake in the bank back in 2007. After his death in a car accident the following year, it emerged that the bank needed an urgent cash injection to stay in business.

# bank-reform - Friday 30 July, 2010

THE UK has expanded its restrictions on bankers pay and bonuses.

The Financial Services Authority (FSA) have expended the number of companies who are subject to restrictions from 27 larger banks to over 2,500 financial institutions.

The move will take place from January 1, 2011 and will mean the UK is the first company to comply with the EU’s legislation on bank bonuses. It will see 40-60% of bonuses over £500,000 deferred for three years. The new code also states that at least 50 per cent of the total package must be paid in shares or share-linked instruments according to the Financial Times.

Regulators worldwide have been scrutinizing executive pay after it was blamed for the excessive risk-taking that led to the recent banking crisis.

European Union governments agreed on June 30 that directors of banks who received public money will be forced to justify their bonuses and lenders will have to report the number of people earning more than €1m to regulators according to Bloomberg.

Efforts in the US to curb excessive pay in Banking haven’t gone quite as far as moves in the EU.

Meanwhile, Metro Bank launched in the UK yesterday, the first new bank to launch in the UK in more than 100 years.

# bank-reform - Friday 16 July, 2010

US INVESTIGATIONS have resulted in huge payouts by two major firms – drugmaker Elan, and the bank Goldman Sachs. The companies were fined a whopping $750 million combined after separate investigations by US officials.

Irish pharmaceutical company Elan will pay a $200 million fine to settle claims arising from a US investigation into how the company marketed its Zonegran medicine. The anti-epileptic drug was sold off by Elan in 2004, and the company had set aside $206 million to cope with costs expected to arise from the probe.

The company is also expected to plead guilty to violating the US Federal Food, Drug and Cosmetic Act, but specific details on the infraction were not released.

US bank Goldman Sachs has agreed to pay $550 million in compensation  to settle a fraud action by US regulators against the company. Regulators accused the bank of misleading investors in subprime mortgage products just as the housing market began to collapse.

They said Goldman Sachs had allowed a hedge fund to package subprime mortgages for their clients while simultaneously betting against those packages. The fine is unlikely to have much financial impact on the company, which earned $13.3 billion last year.

# bank-reform - Tuesday 13 July, 2010

THE FIRST REPORT from the Credit Review Office (CRO) says that banks are not holding credit back from SMEs. Head of the CRO, John Trethowan, said that after two difficult recession years, many SMEs and farms had eroded their business capital leaving banks with diffiicult decisions on the level or risk they should assume.

Mr Trethowan said that there was evidence of a lack of experience among staff in banks who had to help SMEs to complete their loan applications, but he found no “policy or guideline” to suggest banks were withholding credit from these businesses.

Separately, BOI and AIB published plans proposing to lend €6 billion over the next two years to SMEs. The plans have been submitted to Brian Lenihan’s office as per NAMA requirements, and they have been reviewd by Mr Trethowan from the CRO.

The CRO was set up by Minister Brian Lenihan in March to check that the credit system is operating effectively for SMEs, including sole traders and farmers. Since its launch, the CRO website has had 2,650 visits from 2,029 different users.