FT view on the Irish banking collapse
The Financial Times ran a lengthy piece by David Gardner, their international affairs editor, over the weekend. It’s entitled “How bankers brought Ireland to its knees” and is well worth a read. (more…)
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Who’d be a bank chief executive?
Minister for Finance Brian Lenihan did the rounds of the breakfast radio shows today on the back of Bank of Ireland announcing its €3.4 billion fundraising which will see the government get €491 million in exchange for the warrants it held over the bank.
The interview with former Fine Gael minister Ivan Yates on Newstalk Breakfast didn’t pull any punches although there was a sense it was about local political point scoring rather than looking at the big picture of the banking crisis.
The interview with Mr Lenihan on RTE’s Morning Ireland was certainly not in the same confrontational style.
One of the most interesting segments of that interview for me was about compensation for Bank of Ireland chief executive Richie Boucher. Mr Lenihan confirmed (twice) that he sanctioned a salary for Boucher lower than that of many of his subordinates. He also pointed out the €1.5 million pension top-up was only allowed to Boucher could retire early as some of his predecessors had done.
The cap on chief executive pay as part of the government’s bank guarantee is welcome. But it clearly it doesn’t go far enough. Not only are we seeing banks looking at creative ways of getting around it, but other senior bankers are still being paid telephone number salaries, as Mr Lenihan admitted. This in stark contrast to the UK and US where legislation is being looked at to curb bonuses for all bank staff and not just the figureheads. Capping chief executive’s pay is simply not going to change the culture in Irish banking.
Interesting that Lenihan also pointed out to Newstalk that Mr Boucher had to get a ferry to the UK to brief investors in London last week, due to the volcanic ash cloud. Can’t imagine he caught the bus when he got to Holyhead but clearly being chief executive of an Irish bank is not what it once was.
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Sorry still the hardest word for bankers
Despite having to face the wrath of shareholders at its EGM in UCD today, the Governors (i.e. board) of Bank of Ireland are expected to get their way and get approval for its participation in Nama. Shareholders are also expected to approve changes to the rules for passing special resolutions – even if this has the effect of ceding more power to the executives at a time when shareholder trust in banks is at a record low. The full results of both ballots will be available later today.UPDATE: Bank of Ireland has just announced all resolutions have been passed. (more…)
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