The Central Bank of Ireland has concluded a 15-year investigation and inquiry into regulatory breaches at the now-defunct Irish Nationwide Building Society (INBS), revealing systemic failures that contributed to the lender’s collapse during the financial crisis. The entire process has cost the Central Bank more than €24 million.
In its final report, published today, the Central Bank detailed widespread regulatory breaches involving five senior INBS executives. Among them, former finance director Stan Purcell has been disqualified from managing any regulated financial firm for four years and fined €130,000. The decision is subject to confirmation by the High Court.
The inquiry also targeted former INBS managing director Michael Fingleton, chairman Michael Walsh, head of UK lending Gary McCollum, and head of commercial lending Tom McMenamin. Fingleton was removed from the process in 2019 on medical grounds.
Earlier settlements resulted in disqualifications and financial penalties for the other three executives. McMenamin received an 18-year disqualification and a €23,000 fine, while McCollum was barred for 15 years and fined €200,000. Walsh was disqualified for three years and fined €20,000.
The Central Bank inquiry found that more than 40 breaches of financial regulations occurred at INBS, with failures at nearly every level of the commercial lending process. Many loans were issued without proper security or adherence to credit policies. In one cited example from October 2006, the INBS board approved 38 loans worth over €500 million in a single meeting.
At the height of the risky lending practices, by June 2008, 65% of the INBS loan book consisted of profit-share agreements with little or no collateral. These arrangements often lacked personal guarantees from company directors and frequently did not involve regular interest or capital payments.
The inquiry also concluded that INBS’s credit committee failed in its basic responsibilities of managing credit risk, contributing to the institution’s collapse and its €5.4 billion bailout by taxpayers.
Central Bank Governor Gabriel Makhlouf said the conclusion of the inquiry represents a critical step in reinforcing public trust in the financial system.
“The inquiry’s outcome highlights the vital role of senior executives and board members in maintaining strong governance and effective risk management,” Makhlouf said. He added that the case had prompted legislative changes, including the introduction of the Individual Accountability Framework.
The €24.2 million cost of the process included €4.3 million paid to consultants EY and €2.7 million in litigation expenses. Makhlouf defended the expenditure, citing the investigation’s complexity and the legal challenges it faced over the years.
