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The Journal
08-05-2025
- Business
- The Journal
Michael Fingleton accused of 'cart-before-horse' lending after authorising loans without board approval
FORMER IRISH NATIONWIDE boss Michael Fingleton engaged in 'cart-before-the-horse' and 'solo run' lending and approved millions in loans projects before ever bringing them before the board for sanction, the High Court has heard. The civil case against former 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 (INBS) and engaged in property 'gambles' with high net-worth individuals in an informal and speculative manner. 87-year-old Fingleton, who is in ill health after a stroke, 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 Fingleton, who denies the allegation of negligent mismanagement. The losses, relating to property loans, had been estimated by the IBRC at €6 billion. However, only €250 million in damages is now being pursued by IBRC relating to five loans made by INBS, allegedly approved by Fingleton, who the court was told was also 'nodding through' top ups and extensions to certain clients. At the High Court today, Lyndon MacCann SC, for IBRC, during his third day opening the case, said that in 2007 a Luxembourg-registered company called Laurent Properties applied for a loan with INBS to develop two adjacent sites in the south of France to build a hotel and casino. 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. MacCann said INBS issued loans authorised by Fingleton to Laurent Properties in September 2007, without the board having sight of an application. The court heard that Fingleton approved a second loan of €2.1M for the second site, again before the board or the bank's credit committee saw it. The development never took place and by the time Nama purchased the bad loans for €4.5M in 2010, it represented a loss, interest included, of €5.9M – a discount of 57%. Advertisement MacCann said it was 'cart-before-the-horse lending' made without security, guarantees, independent valuations or the board's approval, which 'beggars belief'. In a separate loan to a UK company called Coast and Capital to buy up to 32 petrol stations, a loan of £1.75M had been approved for deposits on a site to be bought from oil giant BP in April 2006. On this occasion, Fingleton told the borrower that INBS would back the entire project and the society indicated it was prepared to loan Coast and Capital £34.5M again without board approval or credit analysis, said counsel. MacCann said that despite the deposit asked for being £1.75M, a sum of £4M was advanced. The board had not approved the advance, even though Fingleton had told the borrower it would be approved, counsel said. 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 INBS for the project without any authorisation from the board and was provided in addition to the £4M for the deposit, said counsel. When the second large loan was issued, the number of sites to be purchased to be flipped had already reduced from 32 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 Fingleton. The court heard of a third deal that incurred 'massive losses', according to counsel, when money was borrowed to purchase and develop an old hospital site outside of Cardiff. In May 2004, £20M was loaned to a company referred to as Galliard (Sully) Ltd, and 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 MacCann. Counsel said fatal planning issues included the safe destruction of the hospital's incinerator. Nama eventually bought the loans 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. Readers like you are keeping these stories free for everyone... A mix of advertising and supporting contributions helps keep paywalls away from valuable information like this article. Over 5,000 readers like you have already stepped up and support us with a monthly payment or a once-off donation. Learn More Support The Journal
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
The Journal
07-05-2025
- Business
- The Journal
Irish Nationwide provided millions in loans to clients before board approval, High Court hears
IRISH NATIONWIDE BUILDING Society was providing millions of euro in commercial loans and top ups to clients before its board could approve them, including one to a commercial client who already had an exposure of a quarter of a billion euro when they were granted a loan for developing luxury holiday homes in France, the High Court has heard. The civil case against former INBS chief Michael Fingleton is in its second day before the High Court, where it has been alleged that he negligently mismanaged the building society (INBS) and engaged in property 'gambles' with high net-worth individuals in an informal and speculative manner. Mr Fingleton (87), who is in ill health after a stroke, 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 property loans, had been estimated by the IBRC at €6 billion. However, only €250 million in damages is now being pursued by IBRC 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. At the High Court today, Lyndon MacCann SC, for IBRC, said the building society operated 'flawed policies', which were then ignored by the lender and made worse by what he called 'flawed practices'. Mr MacCann said an expert witness for IBRC will give evidence to the court that the level of 'delegation of power' given to Mr Fingleton 'was hideously flawed'. Counsel said that in one instance, Mr Fingleton approved a loan of €28M, months before it came before either the board or the credit panel of INBS in January 2009. The loan was for the purchase of two run-down hotels in the French alps despite them not having planning permission for a proposed luxury development. The application for the loan came before the board after it was already approved, it is alleged. The court heard that Mr Fingleton 'nodded' through loans, top-ups and loan extensions by phone or by 'scribbling' a note on memos that reached him, as he did not have a computer or email. Advertisement Mr MacCann said the France loan, referenced 'Ice Mountain', was allegedly approved by Mr Fingleton despite the borrower's company and his daughter already having a combined exposure of 'a third of a billion euro' to INBS and that the company was 'coming in at number seven in a Top of the Pops' – at €260 million – of those lenders with the most exposure to the bank. The court also heard that a different loan for £71 million was 'topped up' by a further £10 million, with only Mr Fingleton's approval on record for the expanded loan. In the case of a separate loan valued at €130 million in 2009, after Mr Fingleton had retired, INBS asked the borrower to repay the outlay. However, the borrower told INBS that the loan had been granted on a 'non-recourse basis' which was disputed by the society. The court was told that the borrower provided INBS with a letter from Mr Fingleton allegedly confirming the non-recourse status of the loan but INBS took legal advice which stated that the loans were of full recourse and that the borrower could indeed be pursued for the money, said counsel. Mr MacCann described the letter stating the loans were non-recourse was an 'extraordinary document' for Mr Fingleton to write and that a hand-writing expert will feature in the case. In opening the case yesterday, 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, on which he also sat. The return on the loans and interest from INBS was that if the properties could get planning permission, they were to be 'flipped' for a profit, making it a 'joint-venture' for INBS in profit agreements. The five loans allegedly approved by Mr Fingleton relate to property land development projects between 2006 and 2008 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. Readers like you are keeping these stories free for everyone... A mix of advertising and supporting contributions helps keep paywalls away from valuable information like this article. Over 5,000 readers like you have already stepped up and support us with a monthly payment or a once-off donation. Learn More Support The Journal
