Bank of Ireland confirmed on Monday that Myles O’Grady, the group’s former chief financial officer, will become its next chief executive, taking up the role on the €960,000-a-year package that the former head of the bank was paid.
The appointment, effective from Thursday, comes months after Mr O’Grady left the bank in March to join Musgrave Group, the food wholesaler and retailer. The bank had taken aim at pay restrictions across bailed-out banks when the executive handed in his notice last year, at a time when he was on a €550,000 pay deal, including pension contributions.
Mr O’Grady subsequently quit Musgrave in August to pursue a “unique leadership opportunity”, which sources said was the Bank of Ireland leadership role.
Goodbody Stockbrokers analyst John Cronin said that he would have had “concerns” if Mr O’Grady was to be paid less than his predecessor, Francesca McDonagh. “Investors want stability at the top of Irish banks and the severe remuneration restrictions are not constructive in that respect,” he said.
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While basic executive pay is largely capped at €500,000 across the sector, chief executives at Bank of Ireland, which avoided nationalisation during the crisis, have enjoyed salaries in excess of that threshold. However, bonuses continue to be effectively banned across the Irish banks that were rescued by taxpayers during the financial crisis.
The appointment comes within months of the Government selling its final shares in Bank of Ireland, making it the first Irish lender to return fully to private ownership following the State’s crisis-era €64 billion rescue of the financial system. Taxpayers recovered €6.7 billion from the bank, having committed €4.7 billion to the ailing group at the height of the crisis.
“I am delighted to welcome Myles back to Bank of Ireland as group chief executive officer. Myles is an exceptional leader with a strong track record of delivery,” said the bank’s chairman, Patrick Kennedy. “The focus of the board remains on the execution and delivery of the significant opportunities available to the group. Myles’ appointment underlines the Board’s commitment to the ongoing successful execution of its existing strategy.”
Senior Bank of Ireland executive Gavin Kelly, who stepped in as interim chief executive after previous incumbent Francesca McDonagh left the bank in September to join Credit Suisse, “will work closely with Myles to support a smooth transition into the role of group CEO, and will remain a key member of the group executive committee,” the company said.
Mr O’Grady, who was previously a top finance executive at AIB, joined Bank of Ireland in June 2019 in a senior finance role. He was appointed chief financial officer in October 2019 and a member of the board the following January. He was heavily involved in AIB’s return to the stock market through an initial public offering (IPO) in 2017 as its group director of finance and investor relations, before quitting the second-largest bank by assets in the middle of 2018. He subsequently took on the role of chief financial officer at housebuilder DRes which was being lined up at the time for flotation.
US private-equity giant Lone Star and Patrick Durkan, managing director of Durkan Residential, were behind DRes. However, the transaction was put on ice in late 2018 and Lone Star decided to develop its large Irish land bank that it was planning to roll into the IPO through its own house building unit, Quintain.
Mr O’Grady also previously held senior positions in international financial services organisations including Citibank and Dresdner Kleinwort Benson.
Bank of Ireland last week upgraded its full-year net interest income growth forecast from 6 to 7 per cent as the European Central Bank (ECB) continues to increase rates more aggressively than previously expected. The bank had previously forecast that its net interest income would only be “modestly higher” this year than in 2021.
Interest income growth is being driven, so far, by the bank no longer being charged negative rates by the ECB for excess deposits stored with the organisation, as well as the bank availing of ultra-cheap loans from the Frankfurt-based institution. Bank of Ireland also moved last week to increase the rates on fixed-rate mortgages for new customers by 0.25 of a percentage point.
