Time for a more local approach by banks


Sir, – A decision was taken some years ago to centralise all decision-making at head office-level either in Dublin or overseas in each of the major banks.

This absurd decision flies in the face of best management practice in most businesses either in the multinational or indigenous sectors, where enlightened organisations have actively sought to decentralise decision-making away from head offices and down to their regional offices, where the managers responsible for decision-making are in regular contact with their customers.

The decisions to follow the reckless trading performance of Anglo Irish Bank by throwing money at business and individual clients was not made by the regional executives of the major banks. Rather it was a greedy and poorly thought-out strategy at head-office level across the entire banking sector to instruct regional managers to set aside their years of experience and of due diligence in assessing loan applications and throw money at customers with little regard to their ability to repay these loans.

When the inevitable crash came in 2008, these same banks compounded their initial errors by then centralising the decision-making in relation to the handling of these distressed loans at head office-level. As we have now seen, this centralisation of decision-making has made it easier for unscrupulous executives to ostensibly prioritise shareholder interest over their customer interest, but in doing so they have ultimately let down their shareholders as well as their customers.

I hope Paschal Donohoe will use this opportunity to instruct all of the banks to follow best management practice by insisting that these banks immediately begin a process of gradually decentralising decision-making powers back to regional managers as a first step in attempting to restore some integrity to our seriously discredited banking sector.

It stands to reason that it is a lot less likely for a regional bank manager to decide to wilfully deceive a customer that they are likely to meet in a business or in a social context on a daily basis than an executive based in Dublin or overseas who has never met, nor is ever likely to meet, the same customer. – Yours, etc,