Updated 3:37 pm, December 12, 2012
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November 2, 2012 by David Murphy
By Business Editor David MurphyÂ @davidmurphyRTE
When politicians from the Oireachtas finance committee ran the rule over the chief executives from Bank of Ireland, AIB and IBRC recently, there were some unexpected results.
Triple A rating went to the committeeâ€™s chairman Labour TD CiarĂˇn Lynch who succeeded in keeping speakers within time limits, including Fine Gaelâ€™s loquacious Peter Matthews. Hovering above junk status was the performance of Bank of Ireland boss Richie Boucher whose terse answers gave politicians ammunition to lambast him.
The familiar issues came around:
Will banks write off vast swathes of mortgage debt for customers in arrears or negative equity?
The banksâ€™ answer was â€śNoâ€ť they canâ€™t afford it and it would cause an avalanche of defaults.
How much are bank CEOs paid?
AIBâ€™s David Duffy receives â‚¬500,000 which is within the Governmentâ€™s salary cap. IBRCâ€™s Mike Aynsley has a basic of â‚¬500,000 but he also gets a temporary allowance and pension contribution bringing it to â‚¬866,000 last year. Bank of Irelandâ€™s Richie Boucherâ€™s base salary is â‚¬680,000 plus pension and allowances giving a total of â‚¬831,000 in 2011.
Why are banks charging fees or higher interest on standard variable mortgages?
The banksâ€™ answer is they have to make a profit otherwise they will need more state support.
The irony of Mr Boucherâ€™s negative reception was that by rights he should be teacherâ€™s pet: of the three banks appearing before the committee his bank received the least amount of state support.
So why did Mr Boucherâ€™s approach provoke politicians when Mike Aynsley of IBRC and David Duffy from AIB escaped relatively unscathed? The answer seems to be his inability â€“ or perhaps his unwillingness – to fathom the motivation behind the politiciansâ€™ questions. He failed to put across the bankâ€™s perspective to public representatives.
Mr Boucher made it seem he believed his bank was less answerable than the others. Bank of Ireland is only 15pc state-owned, while AIB and IBRC are state-owned. Unlike the other two, Mr Boucher has succeed in attracting outside investment.
But Richie Boucher is the only one of the three CEOs who held a senior position in his bank on the night of the infamous guarantee. There has been a purge of CEOs in other banks. However, Mr Boucher has been given the all-clear by the Central Bank to remain in position following a fitness and probity review.
He also appeared before the same committee in July 2008 less than three months before the banks were brought to their knees. Memorably, the banker assured politicians: â€śIf bad debts and the economy get worse, we believe we are sufficiently capitalised.â€ť He was wrong. Bank of Ireland did need both a guarantee and a bailout.
It is something he should bear in mind when he appears before public representatives, some of whom face being unseated because of the continuing fallout from the banking collapse…while Mr Boucher remains in place.
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