Irish Nationwide Building Society (INBS) has admitted to “multiple breaches of financial services law and regulation” and has entered into a settlement agreement with the Central Bank.

The Central Bank said today that the settlement follows the conclusion of its “most significant and extensive regulatory investigation to date”.

The investigation, which focused on INBS’s commercial lending and credit risk management processes, began in 2010.  It related to the building society and certain people involved in its management between 1 August 2004 and 30 September 2008.

Between 2008 and 2010, INBS had losses of more than €6bn, mainly due to the impairment of its impaired loan book.  Under the National Asset Management Agency Scheme, the INBS loan book attracted the largest percentage discount of any of the participating institutions. Its cost to the Irish taxpayer was €5.4bn.

As part of the settlement, INBS has admitted to having committed multiple breaches of financial services law and regulation, including persistent failure to comply with its own internal policies and procedures during the relevant period.

While the maximum fine of €5m has been imposed, the Central Bank said that as INBS does not have any assets, it would not be in the public interest to follow up its collection.

“It was a matter of significant public interest to ensure that a thorough investigation was carried out by the Central Bank to examine key issues arising within INBS between August 2004 and September,” said the Central Bank’s director of enforcement, Derville Rowland 2008.

“This investigation by the Central Bank is unparalleled in its degree of complexity and scale to any case which preceded it.  It has taken a number of years to bring this investigation to fruition and distil it into the case recently referred to inquiry.

“INBS has admitted multiple failings at several levels of its commercial lending process, from operational lending, to credit review, its credit, provisions and audit committees all the way to its board of directors.  INBS’s admitted failings amount to a consistent and, at times, wholesale disregard for its own policies and procedures.”