Matthew Elderfield: talking tough

The Financial Regulator plans to announce tough new regulations this autumn that will lead to sweeping changes on the boards of the Dublin banks, the Sunday Tribune has learned.

Matthew Elderfield has told several senior industry figures that the regulations he plans governing the banks' management will be much tougher than the banks expect.

It remains unclear, however, whether existing banking senior executives, and not only non-executive appointments on the banking boards, will face the tough new tests.

Michael Moynihan, head of the Oireachtas Economic and Regulatory Affairs Committee, said he would support any move the regulator thought necessary to improve oversight of the banks.

The regulator's plans are likely to be much tougher than the requirements listed in a recent consultation document the Regulator issued on corporate governance at credit institutions. In separate written submissions, Bank of Ireland, Anglo Irish and AIB said that various proposals on directorships may be unnecessary.

But Professor Niamh Brennan, director of the Centre for Corporate Governance at UCD, said that some of the regulator's proposals only matched existing codes for stock-market listed banks. "With the notable exception of Anglo Irish, these institutions adopted the governance standards being proposed in the consultation paper and yet got into financial difficulties. This would suggest that something beyond the standard corporate governance mechanisms is required for good governance to prevail," she said in her submission.

She said that there was "anecdotal information" that some directors earn more than €1m in fees sitting on the boards of numerous investment funds.