Irish banks' top echelon survive the bailout cull
Despite the bank guarantee and multibillion euro rescues, the top figures running our banks remain untouched and entrenched, write Nick Webb and Louise McBride
Published 27/03/2011 | 05:00
'Many key executives -- running the property lending, capital markets, corporate banking, and credit and risk units -- are still in top roles at the banks'
AN extraordinary number of the top executives heading up AIB and Bank of Ireland during the boom are still working at the state-controlled banks despite the massive losses and billions of taxpayer money pumped in to keep these shattered institutions afloat.
While Eugene Sheehy and Brian Goggin and some other board members were slowly cleared out after the bank guarantee and multi-billion euro rescues, only the very top layer of management was culled. A Sunday Independent investigation reveals that many key executives running property lending, capital markets, corporate banking, credit and risk are still in top roles at the banks.
AIB is now effectively nationalised after receiving €7.2bn in taxpayers' money. Despite this, three of the board members who were at the helm of the bank before the crash are still in place. David Pritchard has been a director of the bank since early 2007. The British financier is the bank's senior independent director. He is joined by Northern Ireland's Stephen Kingon, who has also been a board member since 2007. Mr Kingon is chairman of the bank's audit committee. Former Irish Association of Pension Funds chairwoman Anne Maher was also appointed in those pre-bailout years.
AIB's former top risk watchdog Nick Treble -- appointed group chief risk officer in January 2008 -- became the head of AIB (UK) last year. He took over from Robbie Henneberry who had headed up the UK business from 2005 onwards. Mr Henneberry is now AIB's head of retail in Ireland.
AIB's global corporate banking division is run by Ronan O'Neill, who moved up from running the Irish corporate banking unit in early 2010 when Jerry McCrohan switched to take over the top job in AIB's capital markets.
Before moving to capital markets, Mr McCrohan had been head of corporate banking since October 2006. Simon Scroope now leads AIB's Irish corporate banking division, having worked at the bank since 1997.
Sources close to AIB have suggested that the bank's ROI unit was responsible for much of the wild lending to developers, and that its corporate and capital markets units were less involved in the overheating property sector.
US operations are run by Paul Carey, who has been in the job since 2007 -- a year before the government guarantee.
The bank's real estate (or property finance) wing is headed up by David Renwick, who has been in the position since 2007. AIB's British property unit is run by Donall O'Shea. Last year, the then chief executive Colm Doherty made a number of senior appointments but -- with the exception of bringing the ESB's Bernard Byrne in as chief finance officer, and Mary Phibbs as interim chief risk officer -- they were all internal candidates. When HR chief Mary Toomey retired in 2010 she was replaced by John Conway who ran the human resources unit in AIB's capital markets.
Joe O'Connor also moved from his job as credit chief at capital markets to become head of group credit. Mr O'Connor had held his credit chief role in capital markets for more than 10 years, from 1998 to 2009. He has been in AIB since the 1970s.
His new deputy Michael O'Farrell had previously been the point man for retail branch banking, and head of credit at AIB's Irish retail unit between 1997 and 2004.
Departures from AIB's top ranks have been rare. Steve Meadows, who had been a key insider, serving as head of technology and chief operations officer, left the bank in December 2009 after four years in the job. The former head of AIB's group business architecture, Marcel McCann, replaced him.
Long standing Central Europe boss Gerry Byrne -- who had been with the bank since 2002 -- left last November after the sale of AIB's Polish business. He remains on the board of the Polish bank until the sale process is complete. Donal Forde, who ran the Irish retail business before missing out on the top job to Colm Doherty in 2009, left seven months later. He joined the Red Cross last year.
Maeliosa O hOgartaigh who had been a top manager before the bail out subsequently became the banks interim finance chief and then its liaison with Nama. He also left last year.
When asked about the lack of movement in the top echelons of management, AIB declined to comment.
One industry source, however, said there had "been a raft of changes" in AIB management over the past 15 months -- particularly in the credit division.
Bank of Ireland, which is struggling to stay out of State control, is also staffed by many of the same top managers who were at the wheel as the bank lost the run of itself during the boom years. While chief executive Brian Goggin and chairman Richard Burrows left in 2009, insider Richie Boucher became chief executive after their departure. He had come from running the bank's UK and Irish retail operations, earning around €2.46m in the two years prior to the bank guarantee.
John O'Donovan joined the bank as group chief financial officer in 2001 -- a position he still holds. He was appointed to the board in 2002. In the two years to 2008, he earned about €3.05m.
Des Crowley was appointed to the board of Bank of Ireland in 2006 -- two years before the blanket guarantee. He has served on the bank's executive committee since 2000. Mr Crowley ran the bank's UK operations from 2006 onwards before become chief executive retail (UK and Ireland ). In the two years before the state guarantee, Mr Crowley earned about €2.75m in wages and bonuses.
Denis Donovan is another long-serving director, having been appointed to the board back in 2006 as the economy was still booming. Mr Donovan, who became head of wholesale financial services in 2003 before taking the top job at Bank of Ireland's capital markets in 2006, bagged €2.95m in pay in the two years up to the state rescue.
Mr Boucher, Mr Crowley, Mr Donovan and Mr O'Donovan also shared €2.8m in the year to March 2009.
The bank also has a large number of non-executive board members who pre-date the bailout. Former top civil servant Paul Haran joined the board -- or the "court" as Bank of Ireland likes to call it -- in 2005 and earned €226,000 in the two years before the guarantee. Denis Holt, the deputy governor and senior independent director, has been on the board since 2006. Solicitor and serial board member Rose Hynes became a director in July 2007 along with former KPMG managing partner Jerome Kennedy, who now chairs the audit committee.
But outside the boardroom, our investigation found that despite the near collapse of the bank, many of the same top executives are still in place or in other high-ranking jobs within the bank.
Bank of Ireland's corporate banking unit has been run by Tom Hayes since January 2006 when he took over from Mr Boucher. Pat Gaynor who runs the corporate banking unit for Ireland also predates the guarantee, having joined from Ulster Bank in 2004.
Liam McLoughlin is head of group manufacturing, having come to the bank in 2004. He became director of group finance and IT in 2007. Vincent Mulvey joined the bank in 1979. A former head of group credit, he joined the executive council as chief credit and market risk officer in May 2009.
The ranks of Bank of Ireland's property lending executive teams have also been somewhat unchanged.
Paul McDonnell has served as head of property finance since 2006, with John Boyce taking the reins of the Irish property unit in 2008. Matthew Galligan has steered Bank of Ireland's US property unit since joining the bank in 2007. Peter Collins was a director of property in BoI private banking before the bailout. He is now the head of real estate management in the unit that matched wealthy people with property investments.
Much of Bank of Ireland's private banking team has remained unchanged over the past 10 years. Kevin Quinn, its director of investments and marketing, has been a member of senior management in private banking since 2000 -- as has Sean O'Murchu, its director of sales and family office. Global markets chief Austin Jennings has been in his current post since March 2006. Group finance director Andrew Keating has been in the job since August 2004, while Niall O'Shea was a director of finance in global markets until becoming head of finance in January 2010.
Peter Morris is now head of Bank of Ireland's group governance and risk unit -- which makes sure that it's not up to mischief or shovelling out bum loans. He joined Bank of Ireland in 1974 before moving to the UK 16 years later. He returned to Ireland as Bank of Ireland's group chief internal auditor in mid-2009 before taking the new job last year.
Bank of Ireland, however, insists there are "continuous and ongoing changes to personnel throughout the group -- as is appropriate for the business".
Examples cited by the bank included Nick Fahy ("who has combined responsibility for retail sales and marketing into his role as chief operating officer") and Stephen Mason, who is "now director of consumer banking in Ireland & the UK".
Sunday Indo Business