View from Dublin: probing the banks' behaviour on tracker loans
The Central Bank maintains that it is keeping all angles open in its enforcement investigations into the behaviour of the main banks on tracker mortgages. These angles include examining 'individual culpability' in the tracker scandal, the Central Bank said during week.
Enforcement investigations have begun into Permanent TSB, Ulster Bank, Bank of Ireland, KBC Bank, AIB and EBS.
It is a relatively new area for the Central Bank. If it makes findings against the banks and fines them money, will it have clear evidence of individual bankers making those decisions which deserved the fines?
Presumably, it will, because companies don't make decisions, the people who run them do.
In the case of the tracker scandal, which now looks like being a €1bn tracker customer rip-off, if the banks deserved to be fined then surely individuals behind those decisions should be personally held to account.
It isn't that simple. The fact that the Central Bank, the Financial Ombudsman and even sections of the courts were so slow to find in favour of customers in all of this, means actions against individual bankers might be fought very hard. The banks might even pay their legal costs, given they would argue they were representing the bank's interest in their actions.
It seems more likely that the Central Bank will give a big warning and a financial shot across the bows by taking enforcement action against the banks, collect some money and warn about banker behaviour for the future. This is akin to the referee giving lots of yellows but never a red card.
The tracker investigation is being presented as something of a regulatory and political success now.
The banks are admitting to more cases, which now number 34,100, and close to €500m has been paid out.
But it remains stubbornly slow. Of the cases identified and where sums of money are due to be awarded in compensation and redress, what percentage of victims have been paid in full?
According to the latest Central Bank update, for those due to receive between €10,000 and €50,000, just 48% of them have been paid in full.
For those due to receive in excess of €100,000, less than one in five of them have been paid in full. And we don't know how many plan to challenge their level of compensation.
The Central Bank is talking the talk about enforcement and even individual culpability, yet its update doesn't even identify the individual banks that have made the least or most progress.
It retreats to referring to how 'Bank A' has made 97% progress on redress and compensation but 'Bank E' is on just 48%.
This doesn't exactly set the tone for going after culpable individuals within banks when the progress update won't identify how each bank is doing. So much for naming and shaming.
If the Central Bank did go after individuals it can fine them up to €500,000 for breaches made before 2013 or €1m for those afterwards.
The regulator can also ban a person indefinitely from acting as a manager in a regulated firm. Would the person be fired?
If they were and if so, would the bank give them a big payoff, presumably to help cover the personal fine?
It is quite possible and depends on their employment contracts.
Central Bank governor Philip Lane did remind a recent Oireachtas committee sitting that while an investigation is going on, "the board members and senior personnel of lenders have significant legal obligations to report potential regulatory breaches to the Central Bank".
Mr Lane's predecessor Patrick Honohan once said that regulators need to talk softly but carry a big stick. Mr Lane is waving the stick at this point, but I don't think he is going to start cracking a few heads with it this time round.
Meanwhile, Irish bankers won't be getting bonuses any time soon if the chairwoman of the ECB Supervisory Board, Daniele Nouy, has anything to do with it. And apparently she does.
Her board regulates bonuses in eurozone banks.
Ms Nouy believes Irish bankers should not get bonuses until the last vestiges of the financial crash are dealt with. The bonus culture in banking is blamed for helping to create the financial crash.
Unfortunately for Irish bankers, the bonus culture has been replaced with no bonuses at all - 'all duck or no dinner' as they used to say down the country.
Finance Minister Paschal Donohoe has shot down AIB's share bonus plans but offered a review of pay policy for later this year.