Latest news with #IrishNationwideBuildingSociety
BreakingNews.ie
20-05-2025
- Business
- BreakingNews.ie
Loans issued by Irish Nationwide in face of financial crash 'hard to justify'
Failed lender Irish Nationwide Building Society was operating akin to a merchant bank when taking "very strong lending positions on speculative proposals", a state-appointed director has told the High Court case against former bank chief Michael Fingleton Sr. State appointed chartered accountant Rory O'Ferrall on Tuesday told the High Court that a series of multi-million euro loans were "very unusual" in the face of an economic crash and were "hard to justify" given Mr Fingleton pledged in 2007 to the society's board that the lender should be "risk averse" in the face of the financial climate. Advertisement The civil case against the former INBS chief executive and managing director alleges that he negligently mismanaged the building society and engaged in property "gambles" with high-net-worth individuals in an informal and speculative manner in the mid-2000s, leading to fatal losses. Mr Fingleton (87), who cannot give evidence due to ill-health, joined the building lender in 1971 and retired in 2009 - he held the roles of both managing director and chief executive in that time. At its height in 2007, INBS had reported assets of €16 billion but was a high-profile casualty of the financial crisis of 2008. Liquidators for Irish Banking Resolution Corporation (IBRC) have taken the case against Mr Fingleton, who denies the allegation of negligent mismanagement. The total losses at INBS had been estimated to be €6 billion. However, only €290 million in damages is being pursued by IBRC, relating to five specific loans, allegedly approved by Mr Fingleton. Advertisement The court has been told that Mr Fingleton was allegedly 'nodding through' top-ups and extensions to certain clients without the knowledge of the society's board. Today at the High Court, Mr O'Ferrall likened the lending of the society to that of a "merchant" bank which, he said, takes higher risks in lending but takes a share of the proposed profit from loans made on projects. He said this criteria of operating requires a different set of skills and expertise in specific industries and areas of the globe in fields such as shipping, railways, property and development. Mr O'Ferrall said Irish Nationwide under Mr Fingleton had taken up "very strong lending positions" in property development on speculative proposals in the UK and France. Advertisement Mr O'Ferrall said that at around the time of loans issued between 2006 and 2009, there was a "generally held view by investors and banking" by 2007 that there was going to be a property market downturn and that by 2008, "all banks" were experiencing the predicted difficulties. Mr O'Ferrall told Lyndon MacCann SC, for IBRC's liquidators, that INBS no longer held a banking licence, was therefore not trading anymore and that its only activity was in resolving various claims, including some from abroad. Gerry McGinn, a former chief executive who arrived after the departure of Mr Fingleton, referenced a loan for a luxury hotel project in a skiing area in the south of France, referred to as 'Ice Mountain', which the borrower had valued at €32.85M with planning permission. However, the project had no planning permission and was then hit with a bill of €565K by French tax authorities. INBS paid the borrower, Cyril Dennis', tax bill when requested to "stay in the game" regarding the asset which was never developed. Advertisement When Nama bought the loan for Ice Mountain in 2010, it stood at around €31 million. Nama paid just under €11 million for the loan, resulting in a loss of €20 million for the tax-payer. Mr McGinn said that when INBS received a valuation "about a hotel in a foreign country, and just getting a number on a page... it is pretty meaningless". Mr McGinn said the interest of the society seemed to have been "secondary" to some of the relationships between Mr Fingleton and the borrower. Mr McGinn said there were a number of different risks in lending into a foreign jurisdiction. He said that the society may have felt that it was a "gun to your head situation" in paying the French tax bill upon Mr Dennis' request in order to avoid being "badly exposed". Advertisement It may, he said, have been a question of the society being stuck "between the devil and the deep blue sea". The case continues at the High Court. In opening the case earlier this month, Mr MacCann said Mr Fingelton "gambled" with the society's money when he allegedly approved "speculative, risky" commercial loans, which sometimes had already been greenlit by him before they were taken before the board of directors or the credit committee. The five loans allegedly approved by Mr Fingleton relate to property land development projects between 2006 and 2009 in the UK and France, despite them having no zoning or planning permission, counsel said. It is further alleged that there were no securities in place on the loans and no personal guarantee sought for or provided by the borrowers. Mr Fingleton was a prominent presence in Irish business during the Celtic Tiger and was reported to have been worth around €75 million in 2006. However, his son has told the courts that his father is reduced to €25,000 in two personal bank accounts and has outstanding judgment debts of more than €10.7 million.
Irish Times
09-05-2025
- Business
- Irish Times
‘Black holes after black holes' in €250m case against Fingleton, court told
There are 'black holes after black holes' in the €250 million damages case against former head of Irish Nationwide Building Society (INBS) boss Michael Fingleton, his lawyer has told the High Court. The civil case against the former INBS chief is in its fourth day before the High Court, where it is alleged that he negligently mismanaged the building society and engaged in property 'gambles' in the mid-2000s with high net-worth individuals in an informal and speculative manner. Mr Fingleton (87), who is in ill health and incapacitated, preventing him from giving evidence, ran the building lender from 1971 to 2009, as managing director and chief executive. At its height in 2007, INBS had reported assets of €16 billion but was a high-profile casualty of the financial crisis of 2008. Liquidators for Irish Banking Resolution Corporation (IBRC) have taken the case against Mr Fingleton, who denies the allegation of negligent mismanagement. The losses, relating to five specific property loans between 2006 and 2008, had been estimated by the IBRC at €6 billion. READ MORE However, only €250 million in damages is now being pursued by IBRC, relating to the five loans, allegedly approved by Mr Fingleton, who the court has been told was also 'nodding through' top ups and extensions to certain clients without the knowledge of the society's board. At the High Court on Friday, solicitor Niall Clerkin, for Mr Fingleton, said there were 'black holes' in the case in terms of documents and witness evidence against his client. Mr Clerkin said there were 'large substantial tracts of documents missing' in the case, according to a former senior staff member at INBS. Mr Clerkin said that a former UK branch manager based in the Belfast office of INBS, Gary McCollum, had told a court in Northern Ireland that documents before the courts were incomplete. Mr Clerkin said that, in addition to the incomplete paperwork in the case, none of INBS' borrowers had been called by IBRC in the case currently before the High Court. 'It is an enormous black hole,' said the solicitor, who said there was no other witness in the case who could give evidence to the level of Mr McCollum regarding the integrity of the five loan files subject to proceedings. Mr Clerkin said that the court could search the Common Law world and 'barely find a case like this'. The solicitor said that it is the plaintiff's case that this type of action could only be heard on 'purely objective grounds'. However, said Mr Clerkin, Mr McCollum had previously evidenced he was unable to answer certain questions regarding diligence on loans because there is incomplete information available regarding the relevant time period at the society. Mr Clerkin said that it is IBRC's case that there was a 'critical triangle' at the top of INBS during the 2006 and 2009 period, namely: Mr Fingleton, Mr McCollum and Tom McMenamin, who the court heard was the head of commercial lending in INBS' Dublin office from 2002. Mr Clerkin said that Mr Fingleton was 'incapacitated' and could not give evidence, that Mr McCollum had given evidence that 'there were substantial tracts of paperwork missing from our files' and that no reason had been put forward by the plaintiff regarding Mr McMenamin not being a witness in the case. Mr Clerkin said there were 'black holes after black holes' in the case against Mr Fingleton. 'This leaves us with one person [Mr McCollum] left in the critical triangle, and he is too confused by the absence of documents to give certain evidence,' said Mr Clerkin. The solicitor said the court was being asked to make a determination in the civil case without a 'settled' set of 'binary, factual documents' available. He said the court could not now decide on what 'alarm bells' did or did not go off for Mr Fingleton regarding caution and due diligence during the period of the issuing of the five loans, which was now a question that simply cannot be answered and that it was 'too easy to portray him [Mr Fingleton] as a man out of control'. In opening the case on Tuesday, Lyndon MacCann SC, for IBRC, said Mr Fingelton 'gambled' with the society's money when he allegedly approved 'speculative, risky' commercial loans, which sometimes had already been greenlit by him before they were taken before the board of directors, on which he also sat. The five loans allegedly approved by Mr Fingleton relate to property land development projects between 2006 and 2008 in the UK and France despite them having no zoning or planning permission, counsel said. It is further alleged that there were no securities in place on the loans and no personal guarantee sought for or provided by the borrowers. Mr Fingleton was a prominent presence in Irish business during the Celtic Tiger and was reported to have been worth around €75 million in 2006. However, his son has told the courts that his father is reduced to €25,000 in two personal bank accounts and has outstanding judgment debts of more than €10.7 million. The case continues at the High Court.
Irish Examiner
08-05-2025
- Business
- Irish Examiner
Michael Fingleton allegedly authorised loans without board seeing application, court hears
Former Irish Nationwide Building Society boss Michael Fingleton engaged in "solo run" lending and approved millions in loans for a failed casino in the south of France, along with the development of a hospital site in Wales, that saw 'massive' losses before ever bringing them before the board for sanction, the High Court has been told. The civil case against former Irish Nationwide Building Society (INBS) chief Michael Fingleton is in its third day before the High Court, where it has been alleged that he negligently mismanaged the building society and engaged in property 'gambles' with high net-worth individuals in an informal and speculative manner. The 87-year-old man, who is in ill health after a stroke, ran the lender from 1971 to 2009, as managing director and chief executive. At its height in 2007, the Irish Nationwide Building Society had reported assets of €16bn, but was a high-profile casualty of the financial crisis of 2008. Liquidators for Irish Banking Resolution Corporation (IBRC) have taken the case against Mr Fingleton, who denies the allegation of negligent mismanagement. The losses, relating to property loans, had been estimated by the corporation at €6bn. However, only €250m in damages is being pursued, relating to five loans made by INBS — allegedly approved by Mr Fingleton — who the court was told was also 'nodding through' top-ups and extensions to certain clients. 'Cart before the horse' lending During his opening of the case at the High Court yesterday, Lyndon MacCann SC, for the corporation, said that in 2007 a Luxembourg-registered company called Laurent Properties applied for a loan with the Irish Nationwide Building Society to develop two adjacent sites in the south of France to build a hotel and casino. Mr MacCann said the borrower valued the property at €7m for the first site, but then applied for a second loan to develop the second site. Mr MacCann said loans were issued to Laurent Properties without the board having any sight of an application before the money was issued in September 2007, by authorisation of Mr Fingleton. The court heard that a second loan of €2.1m for the second site was approved by Mr Fingleton again ahead of the board or the bank's credit committee ever seeing it. The development never took place and, by the time the bad loans were purchased by Nama for €4.5m in 2010, it represented a loss, interest included, of €5.9m — a discount of 57%. Mr MacCann said it was 'cart before the horse lending' made without security, guarantees, independent valuations, or board approval, which 'beggars belief'. In a separate loan to a British company called Coast and Capital to buy up to 32 petrol stations, a loan of £1.75m had been approved for deposits on site to be bought from oil giant BP in April 2006. On this occasion, the borrower had been told by Mr Fingleton that the Irish Nationwide Building Society would back the entirety of the project and the society indicated it was prepared to loan Coast and Capital £34.5m — again without board approval or credit analysis — said counsel. The borrower's estimation was that the value of all 32 filling stations across England and Wales would increase to £38m with planning permissions secured, said counsel. The following December, £27.4m was advanced by the society for the project without any authorisation from the board and was provided in addition to the £4m for the deposit, said counsel. 'Solo run' When the second large loan was issued, the number of sites to be purchased to be flipped had already reduced from 32 down to 23, 'as they fell by the wayside', said counsel. The debt built up on the deal was £30.5m by the time Nama bought them in May 2011 for £11.4m — a loss of 63%. This, counsel said, represented 'a complete solo run' by Mr Fingleton. The court heard of a third deal that incurred 'massive losses', according to counsel, when money was borrowed to purchase and develop a hospital outside Cardiff. In May 2004, £20m was loaned to a company referred to as Galliard (Sully) Ltd. It was then topped up with a further £5m in May 2006, counsel said. 'There was no profit generated. Instead there was a massive loss. Huge,' said Mr MacCann. Counsel said fatal planning issues included the safe destruction of the hospital's incinerator — which would cost £2.2m, 'more than 10% of the first loan'. The loans were eventually bought by Nama at a loss of £23.8m, representing a 78% loss, which counsel described as a 'huge punt' made on 'hope'. The case continues at the High Court. Read More Civil case against Michael Fingleton over mismanagement of funds at his bank opens in High Court
Irish Times
06-05-2025
- Business
- Irish Times
Michael Fingleton for beginners: Former head of Irish Nationwide faces civil trial
Former banker Michael Fingleton faces a civil trial on Tuesday alleging that he negligently mismanaged the Irish Nationwide Building Society , which failed earlier this century following a financial and property crash. Now in his late 80s, Mr Fingleton ran the finance institution for about 38 years, first with the title managing director and later as chief executive. He took over its management in 1971, when it employed just five people, and grew it to a business with assets of some €16 billion at its height in 2007. However, the lender was one of the worst casualties when a property investment bubble burst in 2008, sparking a financial crisis that threatened to leave the State insolvent after the then government guaranteed Irish banks' liabilities. READ MORE Losses were estimated at €6 billion and stemmed from commercial property loans, an area of business where Irish Nationwide was very active. Mr Fingleton left in 2009. The State-run National Asset Management Agency took over its commercial property loans in 2010. The following year, the government merged it with Anglo Irish Bank and established the Irish Bank Resolution Corporation to take over the remains of both lenders. Mr Fingleton and other executives subsequently faced questions about their management of Irish Nationwide, particularly into whether the company followed proper procedures, or applied prudent safeguards, when approving some commercial property loans. The central bank began a long inquiry into the running of Irish Nationwide in 2017. But it dropped any proceedings against Mr Fingleton in 2019 on the grounds of his ill-health. 100 days of Trump: 'It's like The Karate Kid, tax on, tax off, tariffs on, tariffs off' Listen | 42:49 However, the liquidators of the Irish Bank Resolution Corporation are continuing to pursue the civil case that the State institution began in 2012. The claim was originally for €6 billion, but has since been pared back to €290 million and focuses on five loans. The former building society boss, acting through his wife Eileen Fingleton and son Michael Fingleton jnr, under their powers of attorney, attempted to halt the case through court challenges and appeals. His lawyers argued that he could not receive a fair trial as a stroke had incapacitated him several years ago and because of the passage of time since the alleged events. However, the Supreme Court ruled late last year that Mr Fingleton should face the civil trial. Mr Justice Séamus Woulfe said the Court of Appeal was correct in finding that Mr Fingleton's inability to instruct his lawyers or to give evidence in court was not enough to prevent the case going ahead. During his career, Mr Fingleton became a well-known figure in Irish business. He was reported to have been worth €75 million in 2006, when property values were then at their most inflated. His son told the courts that the one-time finance boss now has €25,000 in two personal bank accounts and outstanding judgment debts of more than €10.7 million as of late 2022. The civil trial is scheduled to begin on Tuesday morning in the High Court.
