| 15.2°C Dublin

Senior bankers unlikely to face jail - Governor Honohan

Senior bankers are unlikely to face jail despite laws which could "remove them overnight", the Central Bank Governor Patrick Honohan has told the Banking Inquiry.

The bankers could face fines, however, and be put through a sanctions procedure.

The governor also moved to defend his controversial phone call to RTE's Morning Ireland programme to announce a bank bailout for Ireland.

Legislation was in place to jail bank CEOs, he told Deputy Kieran O'Donnell. The laws were "not perfect" but "we have enough".

"So you could remove them overnight?" said Deputy O'Donnell.

"Ah yeah probably," said Mr Honohan.

"Will we fine them, we might but we have to be graduated in this. Are we going to send someone to jail for violations? No.

"We are not trying to protect anyone here. We are trying to protect our ability to continue to engage and, if necessary, impose fines."

On his call to Morning Ireland on November 18 2010, Mr Honohan said that it was made after €900m in deposits left Irish banks in one single day - the largest ever daily outflow.

In an unprecedented move, the Governor rang the radio programme from Frankfurt where he was at the European Central Bank's governing council meeting. RTE sports presenter Des Cahill picked up the phone.

Mr Honohan described it as "an attempt to restore depositor and public confidence."

"I was anxious to make a credible public statement, especially as depositor outflows were accelerating," he said.

Mr Honohan said other European Finance Ministers were pressing Mr Lenihan to make the announcement but he had refused saying he needed a government decision. The Governor described how there was a sense of panic in the markets.

He did not tell Mr Lenihan or Taoiseach Brian Cowen that he was going to make the call. It might have been a courtesy to inform the Secretary General of the Department but "it didn't occur to me in my excitement to get the message across".

The Central Bank Governor also told the Inquiry the ECB had "inadvertently" done Ireland a favour by forcing us into a bailout.

We could have "staggered on through" the difficult years of 2011 and 2012 "and now we would be saddled with much higher servicing costs", he said.