Francesca McDonagh to step down as Bank of Ireland CEO

Bank of Ireland has announced that Francesca McDonagh is to step down as Group Chief Executive Officer.

In a statement, the bank said Ms McDonagh is expected to leave the bank this September. It said a process to appoint her successor will now begin.

"Francesca has been an exceptional chief executive of Bank of Ireland," Patrick Kennedy, Bank of Ireland Chairman said in a statement.

"Since taking up the position in 2017, she has driven – with ambition and commitment – a clear strategic focus on transformation, service improvement, and business growth.

"Along with agreeing two transformative acquisitions, she has delivered a more efficient, digitally-enabled, customer-focussed and profitable bank.

"All of this strongly enhances the group's long-term sustainability."

Ms McDonagh said while she will leave the bank with a heavy heart, she is proud of all they have achieved.

"Five years ago, we set out to transform the bank’s culture, systems and business model.

"The benefits of this transformation have never been clearer than over the past two years as we navigated the pandemic while also agreeing two significant acquisitions.

"In addition, the strong progress we have made has facilitated the Irish Government in selling down its shareholding and has further reset the State’s relationship with the bank," she said.

During her five-year tenure at Bank of Ireland, Ms McDonagh has led the bank through a period of significant change and restructuring, including the Covid-19 pandemic.

The lender closed 103 branches in the Republic and Northern Ireland last year in a bid to cut costs, amid a rapid shift to digital banking driven by the pandemic.

It has also signed a deal to buy around €8.8 billion worth of performing mortgages, €100m worth of performing commercial and consumer loans, €4.4 billion of deposits and around €300m of non-performing loans from the departing KBC Bank Ireland.

The proposed deal is currently the subject of a phase two investigation by the Competition and Consumer Protection Commission.

Last year, the bank under Ms McDonagh's leadership also agreed a deal to buy the wealth management and capital markets divisions and associated businesses of embattled stockbroker Davy for €440m.

She has also been responsible for driving a programme of cultural change in the bank, following criticism of its involvement in the tracker mortgage controversy.

Last year, the State began a process of gradually selling down its shareholding in Bank of Ireland and it currently owns less than 5% of the bank.

In March, the bank announced it was beginning a share buyback programme, its first in 18 years.

The bank has not indicated what Ms McDonagh, who joined Bank of Ireland from HSBC, intends to do next.

However, her departure will once again focus attention on the pay restrictions in place on Irish bank executives and put pressure on the Government to review the policy.

Bank of Ireland, which avoided nationalisation during the banking crisis, has had more flexibility in senior executive pay than other Irish banks where top salaries are restricted to €500,000.

Last year, Ms McDonagh was paid around €960,000.

However, the Bank of Ireland CEO has in recent years persistently highlighted the difficulties that the pay restrictions are having on attracting and retaining staff in the bank and the sector.

Ms McDonagh’s exit will be the latest in a series of high-profile departures from Bank of Ireland.

Last September, chief financial officer Myles O’Grady announced that he was leaving to join retail group Musgraves.

His announcement came two years after his predecessor Andrew Keating left for buildings materials group CRH.

Minister for Finance Paschal Donohoe, who is responsible for banking policy, thanked Ms McDonagh for her "commitment and professionalism" throughout her time in Bank of Ireland, and wished her success in the future.

"Bank of Ireland has prospered under Ms McDonagh's leadership ensuring that the bank continued to play its role as a vital supporter of economic growth and jobs in Ireland," Minister Donohoe said in a statement.

"She was instrumental in driving a change in culture within the bank, seeing through the IT transformation programme, and also played a key role in helping customers and the country navigate their way through the recent Covid-19 crisis."