Irish Times view on Central Bank report on banking culture: unfinished business

The only mystery is that it took so long for this assessment to be commissioned

‘The Central Bank plans to introduce a new framework that would set conduct standards for staff and is planning more frequent supervision.’ Photograph: Aidan Crawley

‘The Central Bank plans to introduce a new framework that would set conduct standards for staff and is planning more frequent supervision.’ Photograph: Aidan Crawley

 

A Central Bank report on the behaviour and culture of Irish retail banks has found that all have “significant distances to travel” in fully embedding a consumer-focused ethos. The only mystery is that it took it so long for this report to be commissioned.

It is almost a decade since taxpayers bailed out the domestic banks for a combined €64 billion as the State was brought to its knees as a result – in large part – of the incompetence and, in some cases, criminal acts of senior bankers. Yet it was only in October 2017, amid mounting controversy over a tracker mortgage scandal, that the Government mandated the Central Bank to examine the sector’s behaviour.

To date, the tracker mortgage scandal, which saw account holders denied cheaper mortgage rates after the crash, has cost the banks €557 million in redress and compensation, and more than €1 billion when internal costs are included.

This report examined AIB (including its EBS and Haven subsidiaries), Bank of Ireland, KBC, Permanent TSB and Ulster Bank and found a lack of focus on consumers, a continued “firefighting” mentality, deficiencies in leadership styles, a lack of diversity and a need to empower senior staff to make decisions. In response, the Central Bank plans to introduce a new framework that would set conduct standards for staff and is planning more frequent supervision.

An effective banking culture is essential because of the major role played by financial institutions in the economy. Corporate culture comes from within an organisation and is driven by its leaders. It should ensure that common standards of professionalism, honesty, integrity and accountability are maintained to deliver fair outcomes for consumers.

In response to the report, Bank of Ireland chief executive Francesca McDonagh said a healthy internal culture “drives staff engagement and becomes a magnet for talent” adding that a “good culture creates great customer outcomes”. These are fine words but if trust in Irish banks is to be restored, a long road lies ahead.

The Irish Times Logo
Commenting on The Irish Times has changed. To comment you must now be an Irish Times subscriber.
SUBSCRIBE
GO BACK
Error Image
The account details entered are not currently associated with an Irish Times subscription. Please subscribe to sign in to comment.
Comment Sign In

Forgot password?
The Irish Times Logo
Thank you
You should receive instructions for resetting your password. When you have reset your password, you can Sign In.
The Irish Times Logo
Please choose a screen name. This name will appear beside any comments you post. Your screen name should follow the standards set out in our community standards.
Screen Name Selection

Hello

Please choose a screen name. This name will appear beside any comments you post. Your screen name should follow the standards set out in our community standards.

The Irish Times Logo
Commenting on The Irish Times has changed. To comment you must now be an Irish Times subscriber.
SUBSCRIBE
Forgot Password
Please enter your email address so we can send you a link to reset your password.

Sign In

Your Comments
We reserve the right to remove any content at any time from this Community, including without limitation if it violates the Community Standards. We ask that you report content that you in good faith believe violates the above rules by clicking the Flag link next to the offending comment or by filling out this form. New comments are only accepted for 3 days from the date of publication.