Michael Fingleton is also stepping down as chief executive of Irish Nationwide, ending a 37-year association with a society that, according to one critic, he ran like a personal fiefdom.
Fingleton’s 1m bonus, on top of a salary for the same amount, was paid shortly after the Irish government had underwritten the country’s seven most important financial institutions including Irish Nationwide, at a total cost to taxpayers of 440bn.
The decision sparked a Sir Fred-sized storm of outrage in Ireland, which was fuelled by the disclosure that Fingleton also stands to benefit from a 27.6m pension pot.
Like Sir Fred, Fingleton insisted that he was entitled to the bonus in both legal and contractual terms but eventually the pressure proved irresistible with the Green Party, a junior partner in government, leading the attack.
For the colourful character popularly known as ‘Fingers’, this is an ignominious exit, despite the comfort of a de luxe pension plan.
In recent years he had been so successful in building up Irish Nationwide – one of just two remaining mutuals in the Republic – that two years ago it was reporting profits of 391m, with Fingleton collecting a remuneration package of 2.3m including bonus.
Special legislation was rushed through parliament in 2006, paving the way for demutualisation, and the asking price for Fingleton’s society at that time was 1.5bn, which would have meant a sizeable windfall for members.
But then the global financial crisis intervened, the property market in Ireland collapsed and suddenly Fingleton’s strategy, which had turned Irish Nationwide from a mortgage provider to a specialist lender for Irish and UK developers, began to unravel.
Today, some 80% of the society’s 12bn loan book relates to property and construction. It is unclear how much of this will be written off but ratings agency Standard & Poor’s recently reflected widespread concern over potential losses by cutting Irish Nationwide’s rating to just one notch above junk status.
Meanwhile, the search is on for a new chief executive for the society. Non-executive director Danny Kitchen, who is to fill the post on a temporary basis, is the board’s choice but has declined the offer, claiming the government cap on the chief executive’s salary makes the job unattractive.
So, as Fingleton heads into retirement the future for Irish Nationwide is uncertain.
Some reports suggest finance minister Brian Lenihan favours the creation of a so-called third pillar in the country’s banking system by merging Irish Nationwide with Irish Life & Permanent and the Educational Building Society.
The combined group would command a third of the Irish mortgage market but Irish Nationwide’s prospective partners are said to be wary of such a deal, concerned about the extent of the society’s exposure to property loans.