A FORMER long-standing board member of Irish Life & Permanent has said that he regrets that the bank did not lobby the Department of Finance to stop the introduction of 100 per cent mortgage lending during the boom.
Kieran McGowan, a director of the company from 1999 to 2008, said the company complained to the Financial Regulator about Ulster Bank’s introduction of 100 per cent mortgages in 2005.
When the regulator refused to block them, Irish Life & Permanent should have lobbied the Department of Finance to say “you need to step in here”, he said.
In an interview with The Irish Times,Mr McGowan said the then chief executive of Irish Life & Permanent David Went asked the regulator to stop Ulster Bank's 100 per cent mortgage lending.
The regulator told Mr Went (who is chairman of The Irish Times) that it could not intervene as it was a "principles-based regulator", Mr McGowan said. There was "a very robust conversation" in the boardroom at the time about the mortgages.
Despite the regulator’s refusal to stop 100 per cent lending and the company’s opposition, Irish Life & Permanent started 100 per cent lending loans to remain Ireland’s leading mortgage lender.
“Market share was a big issue at the board and a big issue at the company and they said that if we don’t follow we are going to lose share all over the place to Ulster,” said Mr McGowan who retired from the board shortly after the Government bank guarantee.
The company would have come under pressure from shareholders at the next annual meeting over the loss of market share if it lost business to Ulster Bank, he said.
“People would be saying ‘what are you doing?’ All of the various kind of stakeholders would have been on your back if you didn’t do it.”
The number of mortgages at Irish Life & Permanent in arrears of 90 days or more jumped to 14,771 at the end of June from just over 9,000 a year earlier.
Irish Life & Permanent was effectively nationalised in July after the Government injected €2.7 billion to cover higher losses and the cost of shrinking the bank in size to wean it off Irish and European Central Bank funding.
Mr McGowan, chairman of building materials giant CRH, said that the company – which this week announced it is moving its primary listing to London – planned to be more acquisitive in 2012 after three years of reduced activity.
Ahead of an address to the Ireland-US Council business association in New York last night, Mr McGowan added that he expected banks to stop showing forbearance to indebted companies and that this would lead to disposals of value to CRH.
“Are we going to start buying more? We will if there is value there but we won’t be pushed into something that we won’t do.”
