Dramatic scenes at cinema underline disastrous reality

For bank shareholders, the losses on their investments have been more terrifying than any horror or disaster movie

THE SCREENPLAY has been in development for months but, judging from the outrage among Bank of Ireland shareholders at the Savoy cinema in Dublin yesterday, the losses on their investments have been more terrifying than any horror movie.

It was an unusual setting for a meeting to approve the bank’s recapitalisation with €3.5 billion from the taxpayer but it was chosen to accommodate thousands. More than 700 showed up, and shareholders who could not fit into the Screen One arena spilled over into one of the other screens.

The shareholders have lost 94 per cent of the value of their investments in the bank and seen most, if not all, of their nest eggs wiped out.

Judging by those in attendance, many have lost large parts of their current retirement funds.

One shareholder spoke of a woman who relied on dividends from the bank to pay her nursing home fees and since the bank cut the dividend has been passed around relatives for boarding.

The fury of the shareholders was palpable, and understandable.

Just last July, governor Richard Burrows told the same shareholders the bank was well capitalised for the financial storm. Yesterday he said the €3.5 billion wasn’t even the complete solution for the bank, but that there needed to be a scheme to address the problem loans on the banks’ books and an extension of the bank guarantee scheme.

Shareholders vented their anger at the stewardship of the bank in the hands of the court (board) of directors and the management team, and the heavy growth of the development book.

Boucher, who was responsible for the massive expansion of the bank’s €7 billion loans to Irish builders and developers, said the bank had put controls in place on “land-bank lending” but that “clearly those controls could and should have been stronger”.

Mike Soden, a former chief executive of the bank, said it had taken 220 years for the bank’s balance sheet to grow to €100 billion and just four years (2004 to 2008) to double this to a €200 billion business.

Boucher put up a defence, saying he would “fight” to ensure that Bank of Ireland remained independent and avoided nationalisation, but said the time needed to fix problem loans would be long and could be “indefinite”.

Burrows said board members had taken a 25 per cent pay cut, though one shareholder suggested they should take a reduction of more than 90 per cent, matching the losses of the investors, to a round of applause in the cinema.

Shareholders, many former employees, were told the company’s pension plan was in deficit but Burrows said this did not mean their pension was at risk.

Attendees listened intently as the finance director of Dermot Desmond’s investment company told shareholders on behalf of his boss, a shareholder, that the bank was asking them to vote on “an incomplete solution” as further restructuring would be required.

As the four-hour meeting approached its denouement, Burrows moved to wrap proceedings up, saying the cinema would shortly revert to showing films.

For shareholders, this has been both a disaster and a horror movie, and, for the bewildered, something of a comedy as well.