Wednesday 11 December 2019

It's time to sue Fingers to get our money back

IT'S A €6.5bn MESS: He should be made to pay

If anyone doubted that the Irish Nationwide was utterly bust, then the publication of the building society's 2009 results earlier this week will have put the matter to rest. In 2009 the INBS lost €2.5bn. Coming on top of losses of €243m in 2008, this means it has lost €2.75bn in just two years.

These losses have completely wiped out the Nationwide's capital.

It is transferring about €9bn of bad loans to NAMA and the State is having to inject €2.7bn in fresh capital to keep it in business. Such is the shocking state of the INBS loan book that NAMA is applying a massive 58pc discount on these loans, by far the largest discount it has imposed on any bank.

When the almost €3.8bn being paid by NAMA for its bad loans is added to the €2.7bn of extra capital, the total cost to the taxpayer of bailing out the Nationwide will be a massive €6.5bn.

This for a financial institution whose total loan book never exceeded €12.5bn.

And who is responsible for this almighty mess? Unlike most banks or building societies, where responsibility is spread among several executives, the INBS debacle is almost exclusively the fault of one man: Michael Fingleton.

Until he was forced to quit at the end of April 2009, Fingleton had been chief executive of the Irish Nationwide since 1972. During that 37-year period he ran the building society as a personal fiefdom. No opposition -- from either directors, staff or members -- was tolerated. It was very much a case of Fingleton's way or the highway.

This was brought home in November 2007 when the Nationwide's then home loans manager Brian Fitzgibbon went to the High Court to seek an injunction to prevent the building society dismissing him.


In his evidence, Fitzgibbon painted a picture of a lender totally in the grip of one man, Fingleton, who made all of the major lending decisions.

The problem with one-man-bands is that when things begin to go wrong, they go very wrong indeed. This is exactly what happened at the Nationwide.

By the end of 2008, over four-fifths of its loan book was to a handful of builders and property developers in Britain and Ireland.

With no-one prepared to stand up to Fingleton, the Nationwide put all of its eggs in the one basket just as the property bubble was about to burst.

The Nationwide disaster means that its members, basically its ordinary depositors and mortgage borrowers, have seen the value of their society wiped out.

Unlike members of the former Irish Permanent and First National building societies, who each received shares worth several thousand euro when they were floated on the Stock Exchange in the 1990s, Irish Nationwide members can expect to receive nothing now that the State has effectively seized control.

Not that this will bother Fingleton. In 2007 he received a €27.6m pension top up and the following year he was paid a €1m "performance" bonus.

The notion that Fingleton should be allowed to keep this money while the Nationwide members end up with nothing is utterly outrageous.


So how do we get this money back from Fingleton? As a director of the Irish Nationwide he had what is known as a fiduciary duty to the members. This meant that he was supposed to protect their interests.

It is now blindingly obvious that he failed to do so.

This means that Fingleton can, and should, be sued by the Nationwide members for breaching this fiduciary duty.

The members should pursue him for every last cent.

It won't compensate them for their losses, but at least it will mean that Fingleton won't profit while they are left with nothing.

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