UK's Financial Services Authority to quiz Bank of Ireland whistleblowers-Update-The Fine Gael Connection

[PaddyJoe]

Fascinating story in the press across the water today which involves a Labour Peer, the UK banking regulator, two Bank of Ireland whistleblowers and a 'close friend' of Michael Noonan:

The claims emerged after the Daily Mail published a letter from Lord Ahmed of Rotherham to Chancellor George Osborne, calling for an urgent inquiry into the independence of Bank of Ireland UK. The Labour peer quoted a 'senior' whistleblower, who claims the bank's UK division is controlled from Ireland, casting into question the Financial Services Authority's decision to grant a British banking licence.
The unnamed executive, who says he was moved to air his grievances after the bank tried to silence him, told the Mail that he was due to meet with the FSA to discuss the claims.

http://www.thisismoney.co.uk/news/ar...#ixzz1Mjno6SfP

The row over Bank of Ireland UK's independence has intensified, after a second whistleblower claimed the division was controlled from Dublin.

The source, who still works at the Bank of Ireland, said staff recently discovered that they were technically contracted to Dublin after a disciplinary issue involving a colleague.

The company did not respond when asked about contracts.
The source also claims that the chief executive of Bank of Ireland UK, David McGowan, has been sidelined, with directions handed down by another executive located across the Irish Sea.

http://www.thisismoney.co.uk/news/ar...moretopstories

George Osborne has been urged to investigate whether Bank of Ireland’s UK arm, which manages billions of pounds of savings for the Post Office, is a ‘sham’ bank covertly run from Dublin.
The startling concerns are laid out in a letter from Lord Ahmed of Rotherham to the Chancellor, in which he raises fears that Bank of Ireland hoodwinked British regulators into awarding it a UK banking licence.
The licence means that if the bank went under, the British government would be required to bail out its UK savers at the Post Office, up to a maximum of £85,000 per customer.

/snip/
The issue of who controls the London and Belfast operations is critical, as the Bank of Ireland could soon be nationalised by the Dublin government, due to its escalating losses on property loans.
The letter warns that the non- Irish businesses are ‘covertly’ run from Dublin by an Irish executive who is a close friend of Dublin finance minister Michael Noonan and is also said to have the ear of Prime Minister Enda Kenny.

http://www.dailymail.co.uk/money/art...#ixzz1MjprPCSq

[ang]

There is concern that BOI has been using 10BN of those UK funds to shore up their balance sheet here to avoid being Nationalised not good news for us if true.

I bet David had a little word in Enda's ear on this little gem.

[PaddyJoe]

It seems that the Financial Services Authority began to authorise and regulate UK Post Office savings accounts in November 2010 when BOI created a UK subsidiary called Bank of Ireland (UK) PLC.
This meant that deposits were guaranteed by the UK’s Financial Services Compensation Scheme (FSCS) instead of the Irish Deposit Guarantee Scheme.

Post office savers no longer have to rely on the Irish government to protect their deposits from today.
The first £50,000 of cash deposited into Post Office accounts will now be covered by the UK’s Financial Services Compensation Scheme (FSCS) instead of the Irish Deposit Guarantee Scheme.
Previously the Bank of Ireland (Bol) had been in charge of the savings accounts and was operating under an Irish licence. Bol’s creation of a UK subsidiary, Bank of Ireland (UK) PLC, means that the Financial Services Authority will authorise and regulate the accounts from now on. The protection covers the first £50,000 of savings per customer, or first £100,000 if the account is held in a joint name.

http://www.investmentsense.co.uk/pos...ion-under-fsa/

[PaddyJoe]

BOI org chart. UK chief executive David McGowan who is mentioned in one of the links in the OP can be found near the bottom of the left. He reports to Des Crowley who is head of Retail and has been the Director of Post Office Financial Services and First Rate Exchange Services, BOI's joint ventures with the UK Post Office.

[PaddyJoe]

No sign of this story popping up in the Irish media over the weekend. I wonder why?
Another UK report from last week based on the same sources:

The Chancellor is understood to have passed the letter on to the FSA.
A FSA spokesman said: 'We cannot comment on individual firms because of regulatory confidentiality, but as a matter of course we would act on any information received. We did respond to the Treasury in response to Lord Ahmed's letter.'
The issue is urgent because the whistleblower says the bank is hiding the true extent of its financial woes.
Senior bankers are apparently in a 'mad dash' to 'pull the wool over the eyes' of Irish officials determining the value of its loan portfolio -- a key factor in whether it will have to be nationalised.
Lord Ahmed wrote: 'Either way I am told the business is simply too confusing for the government to challenge any of the numbers E even their appointed advisers are reliant of the numbers given to them by the bank.

http://seekingalpha.com/news-article...e-savings-deal

[Captain Con O'Sullivan]

Whoopsie .... considering the way the Board of Bank of Ireland blithely supplied dodgy numbers to the Oireachtas at one point around bouses last year and then breached liquidity regulations in January of this year I'm not surprised there would be alarm in the UK.

I wouldn't believe a word out of the boardroom of BOI unless I was allowed to kick 'em up the arse first to see if they can actually utter an honest sound.

[PaddyJoe]

Moody's has put several UK banks on credit watch, including Bank of Ireland UK:

Anyone who thought the banking crisis was abating will have been abruptly disillusioned by a string of revelations this week.

Credit ratings agency Moody’s yesterday indicated it may downgrade 14 UK lenders, including state-controlled Lloyds Banking Group and Royal Bank of Scotland, Santander’s UK operations, the Bank of Ireland and the Nationwide building society.

It is keeping a ‘negative’ outlook on international bank HSBC and has changed its view on Barclays’ future debt ratings to ‘negative’ from ‘stable.’

Read more: http://www.dailymail.co.uk/money/art...#ixzz1NPdWoj28

We don't really care though now that the British regulator is guaranteeing the deposits, do we? As far as I recall there are no plans for BOI to sell off the UK or Northern Ireland parts of the bank.

[PaddyJoe]

From the UK Independent:
Unhappy British pensioners are pushing the UK Financial Services Authority to investigate Bank of Ireland:

"Financially vulnerable" pensioners have called on the Financial Services Authority to investigate the Bank of Ireland (BoI) over what they argue are attempts to plunder their savings.

The BoI has asked holders of Bristol & West permanent interest-bearing shares (pibs) to hand them over for 20 per cent of their face value, or risk losing virtually everything, as part of a wider, €2.6bn (£2.3bn) financial restructuring. Bristol & West was bought by BoI in 1997.

The legal team for the pibs-holders, who typically use the bonds to top up their pensions because of the generous 13.375 per cent annual interest payments, have written to the FSA's chief executive, Hector Sants, requesting a "review of the conduct of BoI related to the exchange offer", and asking it to make "an immediate public announcement that it is doing so"

This story will be covered in the Irish Saturday Indo as well.
http://www.independent.co.uk/news/bu...d-2298672.html

[C. Flower]

Missed this one up until now. Oh boy.

[PaddyJoe]

Missed this one up until now. Oh boy.

I like this one. Still waiting to a see a whisper about the OP story in the Irish media

[Captain Con O'Sullivan]

I think it is much more likely that either a German bank investigation or a UK Financial Services Authority examination of Irish related bank practices is ten times more likely to lift the lid than any Garda examination.

Wouldn't it be funny if the Gardai came out with some anodyne list of excuses why nothing at all at all was wrong in the Irish banking sector and everything was grand only to have a German or UK investigation blow the lid off it?

I've high hopes for a current investigation in Hamburg and Frankfurt on their banks and points east turning up some interesting news on Anglo-Irish possibly around Depfa and Hypovereinsbank.

All it takes is one banker there turning state's evidence to avoid charges and we'd have some major embarrassment around Dublin quite possibly.

[PaddyJoe]

From the UK Independent:
Unhappy British pensioners are pushing the UK Financial Services Authority to investigate Bank of Ireland:

This story will be covered in the Irish Saturday Indo as well.
http://www.independent.co.uk/news/bu...d-2298672.html

According to ftalphavile the UK Financial Services Authority says that it won't intervene in this case because 'these activities are not within the scope of its regulatory powers and thus it is not able to intervene'
http://ftalphaville.ft.com/blog/2011...nk-of-ireland/

However, one of the pensioners is going to court on Wednesday to try to stop BOI forcing losses on them:

This 73-year-old pensioner, Albert Kempster, will take the Bank of Ireland (BOI) to court on Wednesday to prevent his savings being plundered.

Mr Kempster is one of around 2,000 pensioners and investors who could lose at least 80 per cent of the value of their old Bristol & West building society permanent interest bearing shares (pibs).

http://www.independent.co.uk/news/bu...s-2302789.html

[Dr. FIVE]

Firms regulated by the Financial Services Authority (FSA) paid out more than £160m in compensation to their clients last year,

Figures from Freshfields shows £160.55m in redress was paid out by the UK’s financial firms during 2011, rising from the £62.65m reported in 2010.

The compensation is almost three times higher than the £55.7m in corporate fines the watchdog imposed on regulated firms last year. The value of fines fell about 40% from the £79.46m seen in 2010.

Freshfields notes that an estimated £59m of compensation payments stemmed from the FSA’s investigation of how Barclays sold funds labelled ‘balanced’ and ‘cautious’ to its retail clients. A £7.7m fine was also levied.

HSBC was ordered to pay £29.3m in compensation for mis-selling investment bonds to its elderly customers, alongside the FSA’s largest ever retail fine of £10.5m. Norwich and Peterborough building society paid £51m in redress with a £1.4m fine in the Keydata case.

http://www.fundweb.co.uk/adviser-new...043777.article

[PaddyJoe]

Looks like Bank of Ireland UK's complicated status has finally been cleaned up. The UK Financial Services Authority can finally breath a sigh of relief.

Bank Of Ireland is to split its Retail Division into two separate units. The split will see the creation of a Retail Ireland Division and a Retail UK Division.
Each will be headed up by separate divisional chief executives who will be members of the group executive committee.
In a statement, the bank attributed the changes to "benefits from the sharing of best practice and synergies in areas such as segment and product propositions, operational management and infrastructure".
Des Crowley has been named as chief executive for the Retail UK division. Crowley has held several positions on the bank's group executive committee since 2000, including
chief executive of retail financial services and chief executive of UK financial services at the bank. Crowley worked at Arthur Andersen before joining Bank Of Ireland.

http://www.businesspost.ie/#!story/M...a-89e830395844

[PaddyJoe]

Fascinating stuff from BOI UK:

A HIGH Court judge in London found that Bank of Ireland’s director of business banking Mark Cunningham was “hiding something” in evidence in a case won by the bank against its former head of business banking in Britain.

Mr Justice Geoffrey Vos ruled this week in favour of the bank against Syed Jaffery, head of business banking in its British bank, and his associate Pritpal Gill, but the judge was critical of the testimony of several bank executives.

The judge said Mr Jaffery had breached his fiduciary duties and accepted bribes by being promised an interest and investing in UK property projects supported by millions of pounds in loans from the bank without its prior consent.

Mr Jaffery, who was fired in May, 2011, had claimed that Mr Cunningham had told him in 2009 to look for another job and that he could further his own business opportunities in the meantime.

He had also claimed he and his associate, Mr Gill, had been victimised because he had “blown the whistle” by claiming that the bank’s UK operations was “a sham bank” as it was being operated from Dublin in breach of the UK financial regulator’s rules.

Mr Cunningham claimed that the first he heard about Mr Jaffery being a whistleblower was in the run-up to a Daily Mail article in May 2011 which outlined Mr Jaffery’s “sham bank” allegations.

Mr Jaffery’s claims, which the bank has rejected, were raised by Lord Ahmed in a letter last year to UK chancellor George Osborne.

In a judgment on Wednesday, the judge said he “did not find Mr Cunningham’s evidence wholly satisfactory” and referred to the former political connections of the bank executive, who was an economic adviser to Fine Gael leader John Bruton in the 1990s.

The judge also found that David McGowan, who was previously chief executive of the bank’s British division where he is now chief risk officer, had “prepared very carefully” for his evidence.

“He tried to answer questions truthfully, but was able, rather cleverly I think, to make light of the parts of his evidence that he thought might make things difficult for his employers,” he said.

http://www.irishtimes.com/newspaper/...kV-GF4.twitter