FOR HOW much longer can AIB chairman Dermot Gleeson, Bank of Ireland governor Richard Burrows and their co-directors continue to cling to the notion that it is somehow apt for them to stay on in their well-paid jobs?
Make no mistake, the moment at which their continuation in office lost all credibility passed long ago. Just as hard-working middle-income taxpayers will bear the brunt of painful corrective action this week to recast the woeful public finances, the Government clean-up of the banking mess is set to intensify again with the creation of the National Asset Management Agency (Nama).
Taxpayers will be on the hook to an even greater extent when this new body takes control of development and property investment loans worth up to €90 billion. Yet as it was with the State guarantee on bank liabilities and as it was in respect of the recapitalisation of the big two, there’s still no sign that any bank directors might do the decent thing and accept responsibility for their role in the debacle. Are they bereft of all common sense, merely arrogant or simply blind to the intimate role they played in this particular disaster?
And disaster is what it is. AIB and BoI might yet end up in majority Government ownership; their shares are down 90 per cent in a year; private investors won’t recapitalise them; they need a State guarantee, and €7 billion in State capital too; and their lending is constrained to the extent that assets worth tens of billions of euro are now to be shunted into the unwilling arms the State.
When it comes to accountability, however, all we have had from the bank boards were cuts of 25 per cent in directors’ fees. According to the Covered Institution Remuneration Committee, Mr Gleeson’s annual fee was cut in February to €390,000 while Mr Burrows fee was cut to €393,750 that same month. Not bad for part-time work. Not at all bad given the woes that have befallen both institutions.
Brian Lenihan (left) was coy enough at his press briefing on Nama when asked if it was appropriate for the chairmen and boards to stay in place. Instead of answering the question directly, he noted that the directors of the banks would have to be re-elected at their annual meetings. He noted his 25 per cent voting rights in respect of AIB and BoI but declined to say how he will exercise those rights.
Aside from directors appointed as State representatives under the guarantee scheme, he should not for a moment contemplate supporting the re-election of any of the directors on whose watch the banks went on a lending spree that threatens the very viability of the State. To do so would be impolitic in the extreme and potentially catastrophic for his own credibility. Maybe the directors won’t put him up to it by choosing not to seek re-election. Don’t hold your breath.
