Nyberg Report into the Irish banking crisis published

Tuesday, April, 2011

The Irish government has this afternoon published the Nyberg Report into the causes of the systemtic banking crisis in Ireland (available here). 

The report comes on yet another troubled day for the country, following earlier reports that the former Managing Director of AIB, Colm Doherty, received a pay package of €3m last year. 

The total cost of the bail-out to the Irish banking sector to date is €70.5 billion.  In the latest attempt to re-capitalise the Irish banks at the end of March, AIB was allocated the lion’s share of the €24 billion at €13.3 billion. 

Naturally enough, there has been outrage among the general public at the announcement of Mr. Doherty’s remuneration in 2010.

Running to 172 pages, the Nyberg Report concludes that international developments helped to precipitate the banking crisis but they did not in themselves cause it.  The causes are attributed principally internally, to the banks and their boards and a lack of leadership by the authorities, namely the Department of Finance, the Financial Regulator (FR) and the Central Bank (CB).

One gets the impression from the report that responsibility for supervising and regulating the banks was too thinly spread, with no organisation prepared to stand up and call time on the lending and spending spree.  There were plenty of referees on the pitch, it seems, but each was free-riding on the efforts of the others with the result that risks were allowed (unintentionally) to escalate. The supervisory and regulatory system was unfit for purpose.

The Nyberg Report contains some proposals for improving the system but, given today’s earlier story in respect of Mr. Doherty’s remuneration in 2010, there is a telling comment within the report:

“For people serious about professional public service, money should be even less of an incentive”.

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