UPDATE 1-Irish bank directors risk sacking in c.bank review

* Review applies to anyone in office after Jan. 1, 2012

* Regulator says deleveraging banks will take years

(Adds detail)

By Carmel Crimmins

DUBLIN, March 22 (Reuters) - Ireland's central bank will sack any executive or non-executive director at state-supported banks found to be unfit and may also ban them from continuing as directors under a far-reaching investigation.

Ireland has been trying to salvage its reputation as a financial centre after a banking crisis, fuelled by reckless lending and weak governance, forced the government to seek a controversial bailout from the EU and the IMF last year.

Giving individuals the opportunity to jump before they are pushed, the financial regulator said on Tuesday the review would apply to anyone that plans to be in office as of Jan. 1, 2012, "to allow them an opportunity to make their plans accordingly".

"We will use our new investigative powers, where appropriate, to ensure that the people in those positions meet the required level of fitness and probity," Matthew Elderfield said in a speech.

New standards for directors in the financial services industry will take effect from September.

Ireland's banks, most in state control, have shaken up their leadership in the wake of the financial crisis. European leaders were set to discuss Ireland's ability to deal with mounting bank debt at a summit on Friday. [IDnLDE72K1XZ]

While bankers who dominated Ireland's financial sector during the ill-fated property bubble are gone, some of their replacements were in key positions during the "Celtic Tiger" era and that track record will now be scrutinised.

"We will pay particular regard to the actions of individuals who may have contributed to a financial institution being forced to seek government financial assistance," Elderfield said.

Bank of Ireland (BKIR.I) chief executive Richie Boucher has been in place since early 2009 and oversaw the bank's retail division during the last years of the property bubble.

EBS Building Society [EBSBS.UL] chief executive Fergus Murphy was appointed in January 2008.

Nationalised lenders Anglo Irish Bank [ANGIB.UL] and Irish Nationwide Building Society [IRNBS.UL], being wound down after a slew of scandals, replaced their chief executives with external hires while Allied Irish Banks (ALBK.I), which is effectively nationalised, appointed a former senior banker with HSBC (HSBA.L) as interim executive chairman last year.

The future of Bank of Ireland, Allied Irish Banks, EBS and bancassurer Irish Life & Permanent (IPM.I) will be clearer at the end of the month when the central bank finishes stress testing their books and reviewing deleveraging plans.

Under the EU/IMF bailout, Ireland has pledged to radically shrink its banking sector to reduce dependence on loans from the European Central Bank and its own central bank, which stood at 187 billion euros ($265 billion) at end-February. [ID:nLDE72A1SE]

While the central bank's stress tests were thought likely to show the banks need more state capital, Ireland's new government is reluctant to pump any more in on top of the 46 billion euros already injected and wants the EU and the IMF to help it craft a new rescue package.

Elderfield said forcing banks to sell their loan books quickly would crystallise huge losses.

"Deleveraging the Irish banks to meet new liquidity standards will be a multi-year process to slim down and restructure the banking system," he said. (Editing by Louise Heavens and Dan Lalor) ($1 = 0.7049 euro)