Bank of Ireland's chairman Richard Burrows is to stand down from his post after the bank's annual shareholder meeting in July.
The announcement came as the bank reported a pre-tax loss for the year to the end of March after taking a charge of €1.4 billion for bad debts. The €7m pre-tax loss compares with a pre-tax profit of €1.9 billion a year earlier.
After once-off charges of €340m were stripped out, underlying pre-tax profits fell by more than 80% to €332m.
The bank's profits in its retail banking business in the Republic of Ireland were almost wiped out, falling to €20m from €716m a year earlier. The bank later revealed that 12,200 of its residential mortgages were in negative equity - 6% of the total - and that the percentage of mortgages in arrears had almost doubled in six months.
Mr Burrows apologised on behalf of the directors to shareholders for the loss in value of their shares and the cancellation of dividends. He said accountability for these losses must be taken at the top. The bank said total pay for senior bank executives had been cut by a third and no bonuses would be paid this year or next year.
Chief executive Riche Boucher said the bank faced another difficult year ahead, with lower levels of new business as economic activity falls, as well as higher impairment charges.
Speaking on RTÉ radio, Mr Boucher also admitted he had made mistakes in lending. He said his salary for this year would be €500,000 and that the focus was now on stabilising the bank. Mr Boucher said the bank faced another difficult year ahead, but that it was enthusiastic about working with the proposed toxic debt agency NAMA. He said he was confident any legal issues could be overcome.
A breakdown of the results showed that total loans to customers fell by 1%, while customer deposits were down 4%. The bank also said 25% of its total lending - or €34 billion - is for property investment or development.
The bank's impaired loan charge of €1.4 billion was in line with expectations, with almost half of this coming in the Republic of Ireland. Bank of Ireland said it now expected charges of €6 billion for the three years to March 2011, which had been its worst-case scenario earlier this year.
A breakdown of results in BoI's other divisions showed that Bank of Ireland Life recorded a loss of €31m, compared with a €108m profit a year earlier. Capital markets profits dropped 27% to €474m and UK financial services profits fell 92% to €35m.
Bank of Ireland has also announced plans to buy back some of its debt at a discount. A subsidiary will make tender offers of a maximum of €1.4 billion for securities with a nominal value of €3 billion, though the final figure will depend on the outcome of the tender process.
Shares in the bank closed 25 cent higher at €1.33 in Dublin this evening - up almost 24%.
Tough couple of years ahead, says Boucher
Chief executive Richie Boucher later told reporters that some of BoI's best people were working on NAMA, and the bank had an idea of what loans would be included. He said the bank had put in place a programme of how to manage these loans. Mr Boucher added that large loans to a small number of people 'was not a particular issue for Bank of Ireland'. On nationalisation, he said the Government had said this would be a last resort.
He said the amount of mortgages in arrears stood at 1.9% of mortgages at the end of March, up from 0.9% at the end of September. Mr Boucher said 12,000 mortgages out of 195,000 mortgages were in negative equity.
Asked about loans to small business, the BoI chief said the bank made about 5,000 credit decisions to small and medium-sized enterprises (SMEs) a month, and was approving four out of five of those. Mr Boucher said the difference from last year was 'not material', but the bank was not seeing any desire from customers to buy new premises, acquisitions or equipment.
On the overall economic situation, the BoI chief added that there were 'a tough couple of years ahead'.
Bank of Ireland's chief financial officer John O'Donovan said that the bank's financial position had improved, helped by the injection of money from the Government, and that the buy-back of debt would boost capital further.
