Central Bank governor Patrick Honohan steps down ‘at a very good time’

Patrick Honohan was in upbeat mode as he held court at the top floor of the Central Bank. All smiles as he declared he will leave Dame Street a few months early near the end of the year, he was asked which qualities should be sought in his successor. “A beard, I think, is essential – or a skirt,” he said.

Mr Honohan turns 66 in October. He anticipated revealing his plan yesterday “in an off-hand manner” but was rumbled by reporters on Thursday. He told Minister for Finance Michael Noonan of his intentions early in April.

So how did Noonan take the news? “He was surprised. I said ‘you’re not going to be impressed by this but I’ll be 66’. He said he wasn’t impressed. But he was understanding about it.”

Asked if there any row or any personal issues behind his early exit, Honohan said there weren’t. Although he does not plan to take up a new job, he didn’t rule out writing a book on his experience as governor or to write on other subjects.

“I’ve long been asking myself when is the best moment. I’m not getting any younger . . . This is actually a very good time, because it’s a time of change, a tim e of transition anyway,” he said.

Crisis management

“We’re moving now from the crisis management phase, the crisis management phase is over. If there’s another crisis management phase it’ll be in another crisis and we’re very much now into a phase of repair and consolidation. That’s a different type of activity so it’s a change of gear.”

The Central Bank annual report showed that the institution realised a €2.1 billion profit last year, €1.7 billion of which is being paid to the exchequer. It was a mark of the extraordinary interventions made since the crash that the Central Bank realised profits totalling €8 billion in six years under Mr Honohan’s watch.

After former European Central Bank chief Jean-Claude Trichet offered a resolute defence in Dublin of ECB actions in the Irish debacle, Honohan said it had been a great day for Irish democracy.

“One thing that probably came home to people – but certainly has been my constant view of him – that he is has always been a friend of Ireland. He has been a bit demonised in blogs and stuff,” he said of Mr Trichet.

“Now that doesn’t mean I agreed at every step with all of the things that he said. Of course I didn’t. But he did do very much in the best interest of Ireland and the best interest of Europe. I think when he says that, he is completely sincere. He was never in the position of saying I don’t care about this country or that country.”

The bailout, he said, was a once-in-a-century event in Ireland’s relations with Europe. Asked if he took issue with Mr Trichet’s account, Honohan said he didn’t.

“I’m not disagreeing with anything he said. No, no. Absolutely not.”

Of the unresolved and uncertain scene in Greece, Honohan said he was “slightly more optimistic” in recent weeks than previously. Of the spring economic statement, he had “no message” and but did not indicate any particular concern with the package.

“Of course if the Government were going off the rails entirely we wouldn’t be slow to jump up and down in this building.”

Concern

While Honohan said Ireland’s economy was well on the road to repair, he had concerns still about high indebtedness. Of his time as governor in the heat of crisis, he said there were “few surprises” as he had seen how things went awry elsewhere. “It was like coming into a real live history book here,” he said.

“I know people complain maybe a bit that I make light of things, but I’m always aware of the fact that in this period of time – in central banking characterisation – that the stakes are enormously high and mistakes could have been enormously costly.

“Thanks to the experience of what can be done and what should be done, we might not have got everything we wanted done right. But we avoided false steps.”