Anglo Irish Bank

Anglo Irish Bank's shares had already lost 97 per cent of their value by Thursday. Sean FitzPatrick's resignation as chairman, over €87m of loans extended to him by his own bank, has given its investors even more to worry about. Mr FitzPatrick's feather-bedding was not a one-off. He steadily accumulated more debt every year, shuffled it off to another bank, and then shovelled it back to Anglo Irish after its books had closed at year end. Why such bed and breakfasting? The bank will not say. Moreover, he was not the only senior director to do so. By September, total loans to directors were €150m, three times higher than the year before.

Such murky dealings are the last thing Ireland's banks need as the government prepares a €10bn recapitalisation package for the sector. Although the transfers were not illegal, the strongest criticism Anglo Irish has so far mustered about its former chairman is that the loans were "inappropriate from a transparency point of view".

A career banker with more than 30 years' experience, Mr FitzPatrick was surely familiar with the principles for disclosing related party transactions. Yet the buccaneering culture he created at Anglo Irish appears to be one of how to bend the rules without being caught. That is always the risk when one person is allowed by regulators and board alike to run a bank for more than two decades. He turned Anglo Irish into a personal fiefdom where no one dared challenge the chief.

The inevitable suspicion is that Mr FitzPatrick invested the money in commercial property. This, like Ireland's banking system itself, may have worked well during the bull market. Now it is the very sector that has brought Ireland's biggest banks to their knees. If the subsequent resignation of David Drumm, chief executive, marks belated regulatory intervention, so much the better. This is cosy Irish capitalism at its worst.

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