Bank of Ireland chair wants pay restrictions lifted to create ‘level playing field’

Patrick Kennedy tells shareholders at AGM that caps should be replaced by European Banking Authority guidelines on remuneration

Bank of Ireland chairman Patrick Kennedy has called for the Government to lift pay restrictions that apply to the company as the State sells down its remaining small stake in the lender by the end of this year.

Speaking at the company’s annual general meeting, Mr Kennedy said the “crisis-era restrictions” should be replaced by European Banking Authority remuneration guidelines, which put a “far greater emphasis on good risk management and sustainability”.

“This would enable the group to implement a remuneration approach that allows us to compete on a level playing field … is aligned to European norms … and operates to the highest risk-management and risk culture standards,” he said.

Mr Kennedy described the pay restrictions as a “clear competitive disadvantage” resulting in “people risk at the group” never being higher. He noted that Bank of Ireland had returned €6.5 billion to the State having received a bailout of €4.8 billion post the 2008 crash. The State has been selling down its stake recently, and it now sits at below 4 per cent.

Bank of Ireland’s chief executive Francesca McDonagh recently announced her departure from the bank for a better paid senior role with Credit Suisse. Mr Kennedy said she had been an “exceptional” CEO who had delivered a more efficient, a more digitally enabled, a more customer-focused and a more profitable bank.

Ms McDonagh told shareholders that the bank was “highly focused” on supporting customers from Ulster Bank and KBC who are looking to move their accounts to a new bank.

“These are exceptional changes in the banking market, and we recognise that some customers will find moving account challenging. That is why we have put in place a range of supports … including personnel, dedicated customer supports, and a high-profile customer awareness campaign … to help make the transition as seamless as possible,” she said.

Mr Kennedy said the higher interest rates could provide a “further tailwind” to revenues. The Bank of England has already increased its rates while the European Central Bank is expected to do so in July, with additional hikes forecast for later in the year.

“The outlook for the group is positive, with forecasts pointing to 2022 being a year of economic growth. We continue to be vigilant of risks, including the lingering effects of Covid-19 and geopolitical uncertainties,” he said.

Mr Kennedy welcomed clearance this week from the Competition and Consumer Protection Commission for its acquisition of up to €9 billion in loans from KBC Bank Ireland, which is quitting the market here. And he said all approvals had been received for its acquisition of stockbroker Davy, with the deal set to complete in the “coming weeks”.

Ciarán Hancock

Ciarán Hancock

Ciarán Hancock is Business Editor of The Irish Times