By Jonathan Saul and Carmel Crimmins
DUBLIN, Dec 20 (Reuters) - Ireland's financial regulator said on Saturday it would review the treatment of directors' loans at major lenders amid mounting anger about activities at Anglo Irish Bank.
Anglo's chairman Sean FitzPatrick and chief executive David Drumm resigned within hours of each other this week after FitzPatrick said he had transferred loans he had received from the bank to another bank before each year-end over a period of 8 years.
The loans totalled 87 million euros and did not appear in annual accounts available to shareholders.
The Irish Times newspaper said the government was set to inject 3 billion euros into Anglo Irish and become a majority shareholder. The finance ministry and Anglo Irish declined to comment on the report, which did not cite any sources.
In an editorial, the newspaper also questioned the merit of bailing out Anglo following what it described as a 'shameful episode'.
The regulator, which has been widely criticised after the revelations at Anglo Irish Bank, said it would probe directors' loans at institutions covered by a 400 billion euros ($558.3 billion) government guarantee programme.
Staff from the Irish Financial Services Regulatory Authority have been placed full-time in all of the covered banks and building societies -- Allied Irish Banks, Bank of Ireland, Anglo Irish Bank, Irish Life and Permanent , Irish Nationwide Building Society and the Educational Building Society.
'The Authority has instigated a review to determine the treatment of directors' loans in the institutions covered by the government guarantee so as to ensure that proper standards are being observed,' it said in a statement.
The regulator also said it would undertake an urgent review of events surrounding directors' loans in Anglo Irish Bank and will report its findings in three weeks.
OPPOSITION
The government, which has promised to invest 10 billion euros to bail out the Irish banking sector, has vowed to underwrite Anglo Irish's capital needs but Fine Gael, the main opposition party, said the lender should not be bailed out.
'Having lost the trust of both the markets, the regulatory system and the wider public, recapitalising Anglo Irish Bank using tax-payer resources is, in Fine Gael's view, neither appropriate nor likely to have any impact on credit availability,' finance spokesman Richard Bruton said.
FitzPatrick said while the transfer of the loans did not breach banking or legal regulations, it was 'inappropriate'.
Anglo Irish's shares hit a record low of 19 euro cents on Friday, valuing the bank at just 144 million euros, before they regained some ground to close at 35 cents.
The bank's stock has been battered since the middle of the year as the global financial crisis and domestic recession have rattled investor perceptions about its heavy exposure to a struggling commercial property sector and its reliance on wholesale market funding.
(Writing by Carmel Crimmins, editing by Mike Peacock) ($1=.7164 Euro) Keywords: ANGLOIRISH/ (jonathan.saul@reuters.com; +353 1 500 1504; Reuters Mesaging: jonathan.saul.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2008. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
DUBLIN, Dec 20 (Reuters) - Ireland's financial regulator said on Saturday it would review the treatment of directors' loans at major lenders amid mounting anger about activities at Anglo Irish Bank.
Anglo's chairman Sean FitzPatrick and chief executive David Drumm resigned within hours of each other this week after FitzPatrick said he had transferred loans he had received from the bank to another bank before each year-end over a period of 8 years.
The loans totalled 87 million euros and did not appear in annual accounts available to shareholders.
The Irish Times newspaper said the government was set to inject 3 billion euros into Anglo Irish and become a majority shareholder. The finance ministry and Anglo Irish declined to comment on the report, which did not cite any sources.
In an editorial, the newspaper also questioned the merit of bailing out Anglo following what it described as a 'shameful episode'.
The regulator, which has been widely criticised after the revelations at Anglo Irish Bank, said it would probe directors' loans at institutions covered by a 400 billion euros ($558.3 billion) government guarantee programme.
Staff from the Irish Financial Services Regulatory Authority have been placed full-time in all of the covered banks and building societies -- Allied Irish Banks, Bank of Ireland, Anglo Irish Bank, Irish Life and Permanent , Irish Nationwide Building Society and the Educational Building Society.
'The Authority has instigated a review to determine the treatment of directors' loans in the institutions covered by the government guarantee so as to ensure that proper standards are being observed,' it said in a statement.
The regulator also said it would undertake an urgent review of events surrounding directors' loans in Anglo Irish Bank and will report its findings in three weeks.
OPPOSITION
The government, which has promised to invest 10 billion euros to bail out the Irish banking sector, has vowed to underwrite Anglo Irish's capital needs but Fine Gael, the main opposition party, said the lender should not be bailed out.
'Having lost the trust of both the markets, the regulatory system and the wider public, recapitalising Anglo Irish Bank using tax-payer resources is, in Fine Gael's view, neither appropriate nor likely to have any impact on credit availability,' finance spokesman Richard Bruton said.
FitzPatrick said while the transfer of the loans did not breach banking or legal regulations, it was 'inappropriate'.
Anglo Irish's shares hit a record low of 19 euro cents on Friday, valuing the bank at just 144 million euros, before they regained some ground to close at 35 cents.
The bank's stock has been battered since the middle of the year as the global financial crisis and domestic recession have rattled investor perceptions about its heavy exposure to a struggling commercial property sector and its reliance on wholesale market funding.
(Writing by Carmel Crimmins, editing by Mike Peacock) ($1=.7164 Euro) Keywords: ANGLOIRISH/ (jonathan.saul@reuters.com; +353 1 500 1504; Reuters Mesaging: jonathan.saul.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2008. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.