As I have stated many times before, the primary duty and responsibility of the public interest directors as well as all the other directors is to ensure that the institution on whose board they serve is run properly and appropriately. The responsibility of public interest directors under company law is to the institution on whose board they serve.
The legal position is that any director appointed to the board of the covered institutions whether under the Credit Institutions (Financial Support) Scheme 2008 or otherwise is subject to the requirements of company law in relation to the discharge of their responsibilities as a company director. As such, the director is legally bound to act in what he or she believes are the interests of the separate legal entity that is the institution itself. These are the directors' so called fiduciary responsibilities. To address the scope for actual and perceived conflicts between the fiduciary duties of the directors of financial institutions under company law and the wider public interest in circumstances where those institutions have received huge financial support from the State, legal clarity, not just to the role of the public interest director but to that of the entire boards of those institutions, was provided under Section 48 of the Credit Institutions (Stabilisation) Act 2010. It provides that the overriding duty of directors of the covered institutions relates to the public interest as set out in the Act.
Accordingly, public interest directors do not have a formal reporting relationship to the Minister or to the Department of Finance. As Minister for Finance, I am strongly committed to ensuring that the boards of the covered institutions act at all times in a manner fully consistent with key public interest objectives for the banking sector.
The public interest directors serve at my request and it is the prerogative of the Government to request them to step down or be replaced.
The public interest directors at Bank of Ireland do not have a specified time in office as stated in response to PQ 49476/12. The same situation applies to the public interest directors at AIB. In PTSB, as stated in PQ 49482/12 the public interest directors were appointed until 30 September 2010 but have remained since that date as a replacement Government guarantee scheme has remained in place since then. The Memorandum and Articles of Association of the Permanent TSB require each director to retire every third year but in practice each public interest director has been subject to re-election by shareholders at each AGM since their appointment.
Subsequent to the recent meeting of the Oireachtas Finance Committee I await with interest their deliberations. However, the Deputy should also be aware that officials from my Department meet with representatives of the various banks on a regular basis – including a monthly management meeting with each covered institution at which the CEO would usually attend.
