Director of Credit Institutions Supervision, Ed Sibley, outlines priorities in first speech in the role

• In first speech since appointment, says that while progress has been made, significant vulnerabilities remain due to the legacy of the crisis
• Outlines supervisory priorities for the role, to include resolving Non-Performing Loans, scrutiny of strategic and business model risk, and matters related to governance, culture and diversity.
• Commits to continuing to challenge, question and hold firms and management to account

The Director of Credit Institutions Supervision, Ed Sibley, has said that while the financial sector is in the process of moving from a crisis management to a crisis prevention phase, it is happening at a time when we are still managing the aftershocks of the crisis itself.

In his first speech since his appointment, he remarked that good progress has been made in the banking sector since the crisis, but that it remains fragile and vulnerable to reversal. He said “Having the crisis so close in the rear view mirror, and in some aspects still with us, means that we have daily reminders of the human and economic cost of it. We cannot have a repeat.” He made the comments at a Grant Thornton industry event in which he outlined his priorities for the role.

On Non-Performing Loans (NPLs) he said “There is a large amount of momentum behind the progress on the resolution of all but the most deeply in arrears NPLs, which is reflective of the work undertaken by the credit providers, the actions of the Central Bank both before and within the Single Supervisory Mechanism (SSM), and the improving economy.” However, he went on to say that “The high level of NPLs is a continued symptom of the crisis and the tip of a very large iceberg, the even higher level of restructured commercial and mortgage debt is the rest of the iceberg sitting below the surface.”

On the impact of technological innovation he noted that anticipating, understanding, and considering the risks associated with the astonishing pace of technological change and the impact it will have on financial services firms is incumbent on all in the industry.

In addition to comments about governance, risk management and evolving capital and liquidity requirements, he said “It is clear that cultural issues are frequently linked with firm failures.” He remarked the SSM is developing its approach in this area and will be undertaking behaviour and culture inspections in the Irish banks in due course, as well as informing the development of wider Central Bank thinking on this important topic.

Read the full speech.