Tuesday 27 September 2016

'Internal churn' of employees is sparking worries at Central Bank

Management concerned that high-profile resignations could lead to 'brain drain' of talent, writes Simon Rowe

Simon Rowe

Published 28/08/2016 | 02:30

Files released by the Central Bank reveal that despite spending €1.1m on a hiring drive in 2015,
Files released by the Central Bank reveal that despite spending €1.1m on a hiring drive in 2015, "recruitment remained a challenge" for the regulator throughout this year (Stock picture)

Central Bank bosses are growing increasingly concerned at a rapid turnover of senior staff - with some divisions experiencing a 20pc turnover rate - along with high levels of 'internal churn', according to newly released files.

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The annual staff turnover rate at the Central Bank has been almost 8pc since 2013. But its chief operations director, Gerry Quinn, claims that this figure "masked a significant internal turnover of staff", or churning, according to newly released documents.

A number of high-profile resignations risks leading to a 'brain drain' at the bank, industry sources warned last week. And it is set to get a lot worse if, post-Brexit, UK financial firms begin headhunting staff for Irish operations and the ECB completes its hiring push.

The bank's deputy governor, Cyril Roux, has warned that such a corporate 'brain drain' will hamper its regulatory ability and "bring further stresses to the bench strength of banking supervision in the Central Bank".

Files released by the Central Bank reveal that despite spending €1.1m on a hiring drive in 2015, "recruitment remained a challenge" for the regulator throughout this year.

Although the bank has targeted a staffing increase of 20pc, or 300 jobs, over a three-year period - bringing its total headcount to 1,829 - "resourcing remained a key focus and challenge", according to minutes of summer meetings of the Central Bank Commission, an internal oversight body.

Liz Joyce, the bank's director of human resources, alerted the Banking Commission to "very high levels" of churning - whereby vacant roles are filled by internal candidates - on top of the 20pc turnover rate in some departments.

She said the internal churning was "partly a result of the challenges of recruiting new staff and due in some part to the restrictions imposed by the FEMPI legislation", the Government's public sector pay restraint and pension levy provisions.

The move to a new headquarters in North Wall Quay is putting added strain on certain sections of the bank, especially IT staff, according to bank documents.

Banking Commission minutes reveal that concerns were voiced by operations chiefs in April over "huge demands" placed on IT delivery "and the challenges the area was facing, particularly as regards recruitment of the necessary staff, all of which carried an element of risk".

It is understood that the bank has also been hit by a wave of resignations from staff leaving for more lucrative posts with greater career opportunities at the European Central Bank, which is increasing its SSM (Single Supervisory Mechanism) headcount by 25pc and recruiting 230 staff for its regulatory arm.

Industry insiders say the Central Bank has been hit by a "perfect storm" of events.

"Right now, the bank is trying to upscale its workforce and move to a new headquarters at the same time as, post-Brexit, UK financial firms are looking to headhunt staff for new Irish-based offices.

"On top of this, the ECB is on a hiring drive. So the talent pool for banking staff in Ireland is being severely depleted," said one banking insider.

"And if Brexit does lead to more inflows of more financial institutions into Dublin, those institutions will want to expand quickly, and they will do so by hoovering up Central Bank staff. But because of public sector pay restraints under FEMPI, Central Bank salaries are low compared to the private sector, so they will be lured away by higher salaries," said the source.

"Also, if Brexit does lead to more inflows of more financial institutions in Dublin, it's going to increase demand for the supervision and licensing of these institutions. However, the Central Bank is already under pressure in terms of staffing for its regulatory arm, so that pressure will only get worse."

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