Ross cashed in his Bank of Ireland chips for a reason

The sale had nothing to do with the bank’s prospects, says US billionaire

Is this latest share sale a call by Wilbur Ross on Bank of Ireland?

Is this latest share sale a call by Wilbur Ross on Bank of Ireland?

Wed, Jun 11, 2014, 01:00

A couple of years back, billionaire US investor Wilbur Ross brought together a number of top executives from the various companies in which his group, WL Ross & Co, is invested.

They met in New York and it included Bank of Ireland chief executive Richie Boucher, who was feeling a touch nervous about the meeting.

To help break the ice, Boucher presented Ross with a Leinster rugby jersey. With the Bank of Ireland brand emblazoned across the chest (as team sponsor), and Ross’s name on the back, the American was charmed by the gesture and proudly modelled the jersey to those assembled.

It was a smart move by Boucher who seemed to enjoy a warm working relationship with Ross throughout his near three-year investment. Ross never tired of praising Boucher publicly at a time when others were looking to stick the knife in and he said on Monday evening that he had “total confidence” that Boucher would “lead the bank to a better performance in the years to come”.

In a sense, Ross and Boucher needed each other. The investment in July 2011 by Ross and a syndicate of other North American investors helped Boucher keep Bank of Ireland out of State control, a fate that befell AIB and Irish Life & Permanent.

It possibly saved Boucher’s job at a time when the Minister for Finance Michael Noonan was under pressure to ditch him and almost certainly allowed him to retain his €843,000 annual remuneration, which is above the Government’s salary cap.

Ross, meanwhile, needed someone to execute a turnaround strategy at Bank of Ireland and earn him a profit for his own investors. Say what you like about Boucher, but the Zambian-born executive is a grafter with an ability to focus in on goals.

He was part of an executive team that made some poor lending decisions in the boom years but he was also hungry to turn around the bank’s fortunes.

Piece by piece, it has fallen into place to the point where Bank of Ireland is now back in profit and has repaid the €4.7 billion in bailout cash that it received from the State. Meanwhile, AIB is still handcuffed to the State and a question mark continues to hang over the future of Ulster Bank.

Improved

Bank of Ireland’s improved performance over the past three years and the sooner-than-expected upturn in the Irish economy has allowed Ross to cash out with a healthy €477 million gain.

Is this latest share sale a call by Ross on Bank of Ireland, some five months before we get the results of the pan-European bank capital stress tests?

Is it a call by the wise one about the nascent Irish economic recovery?