POLITICAL REACTION:THE RETIREMENT of Patrick Neary as financial regulator was an inevitable consequence of the failures of the banking regulatory regime exposed in recent weeks, Fine Gael said last night.

Reacting to Mr Neary’s announcement, the party’s deputy leader and finance spokesman Richard Bruton said it remained to be investigated why the practices identified in Anglo Irish Bank were not reported up the line and acted upon within Mr Neary’s office.

“This may be the first tangible signal that the people in Irish banking, both at a commercial and regulatory level, that brought our banking system to this low ebb will not and cannot be the people that bring us out of this mess,” Mr Bruton said.

A Labour Party spokesman said there was no surprise at Mr Neary’s retirement given recent events surrounding the banking sector.

“In particular, there were questions about the disclosures of the loans [of €87 million to former chairman Seán FitzPatrick] at Anglo Irish Bank,” he said.

Green Party chairman and finance spokesman Dan Boyle welcomed the announcement. “It is clear that confidence in the Irish financial services sector has been badly eroded by the events of the last six months,” he said.

“The inability of the regulatory authority to acquire appropriate information pertaining to the stability or otherwise of Irish financial institutions has meant that Mr Neary’s stepping down had become inevitable.

“It is a necessary measure to restore confidence that had been so badly dented.”