Banking ‘must be a support, not a threat’
BoI chief Boucher says taxpayers were right to be angry about bank bailouts
Intel’s Claire Goode (left) and Sarah Sexton and Donal Lawlor of Trend Technologies at Ibec’s CEO Conference in Dublin on Wednesday. Photograph: Dara Mac Dónaill 12/2/2014. - FINANCE -L-R; Claire Goode, Intel, Sarah Sexton, Intel and Donal Lawlor, Trend Technologies, at the Ibec CEO conference ‘From Here To Prosperity’ at the Convention Centre Dublin.Photograph; Dara Mac Dónaill / The Irish Times
Bank of Ireland’s chief executive Richie Boucher said the country’s solvency should never again be threatened by the financial sector.
“The banking system must move from being a threat to the economy to being a support system for the economy,” he told delegates at an Ibec conference in Dublin on Wednesday.
He said there were “far better” ways to use exchequer funds than “propping up a bank” and said taxpayers were “right to be angry” about the bank bailouts, which have amounted to €64 billion since 2008.
Bank of Ireland received €4.8 billion in direct State aid following the collapse of the financial sector in 2008. It was also supported by the Government’s bank guarantee.
Mr Boucher said the bank had undertaken a necessary but painful restructuring to save the business from collapse.
This included selling certain assets, reducing its costs by about €500 million and parting company with more than 6,000 staff. He described these actions as “regrettable”.
However, he said the bank had weathered the storm, and had since raised €10 billion in private capital, while so far returning €5.9 billion to the State, which continues to have a near 14 per cent shareholding in the bank.
He said it was “absolutely right and appropriate” that the State was making a profit on its investments in Bank of Ireland.
Mr Boucher said the bank was planning to provide more than €30 billion in new lending into the Irish economy over the next five years to support its recovery. “We strongly believe this is a time of opportunity,” Mr Boucher said. “It’s an ambitious target.”
This would be “diversified”, covering mortgages, SMEs and other lending. This includes a fund of €250 million for the construction and development sector and €75 million to aid homeowners to avail of recently-introduced tax breaks for home improvements. It is also currently writing about four out of every 10 new mortgages.
He said the bank was also making a significant investment in its technology and payments systems and was committed to retaining an extensive branch network.
Mr Boucher said Bank of Ireland believed the “recovery in Ireland is well underway”.
“Every week there are more people with money in their pockets because they have found work.”
In a panel discussion, he said Ireland had too many banks before the 2008 crash and probably needed about four now, based on the experience in Australia, Canada, South Africa, Belgium and the Netherlands.