Martina Devlin: Still there is no humility as they rifle our pockets
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NEVER has arrogance cost a country so dearly. The haughtiness, ineptitude and delusional posturing of our leading bankers, along with their refusal to accept the scale of their mistakes, have been tolerated for too long.
We're paying for it now. The magnitude of the bill presented to taxpayers yesterday was hair-raising. When Brian Lenihan called the Anglo rescue package unpalatable but "the least worst option", he could have been referring to the entire banking clean-up operation.
None of it is particularly easy to swallow. Still, one way to sweeten the pill would be to give us something in return for our money.
Let's have a real spring clean of the banks, not the lick and a promise we've been palmed off with. Bankers played fast and loose with the economy, in the Finance Minister's tough words -- so there's no need for us to be so forgiving towards them. Especially since their conceit about their ability to sort out the crisis intensified the problems we now face.
Listen to them at AIB, bucking against the Government's reluctant decision to take a majority stake, as though their loan book isn't a nightmare aggregate of reckless lending and inadequate securities.
Likewise with executives at Bank of Ireland, with their bullish talk about raising capital by selling shares, as though investors will be queuing for this irresistible chance of a lifetime.
Over the past 18 months, since the government guarantee, our banks have been in denial. Many of the difficulties faced in the sector today can be traced back to the egotism of bankers who consistently refused to believe the evidence of their own balance sheets. From the outset, they were unrealistic about how much assistance they would need to survive.
A black hole has gaped in their finances, but they have insisted on presenting it as a slight crack. These people would try to make Armageddon sound like a bad day at the office.
Since bank shares began falling in August 2007, bankers have told us they can handle things. For too long, we believed their spin. Now, the cost to the taxpayer could be €30bn.
We've had the evasion, the prevarication and the deceit. Finally, we're facing the truth. We think. After all, this €30bn is a guesstimate and there are no guarantees that it's the last word. Who knows what the final bill will read?
Even when events should have humbled the bankers, they have remained puffed up with misplaced confidence. Bizarrely, insiders continue to run both AIB and Bank of Ireland. There wasn't much of a clean sweep at either bank -- no wonder the public is cynical. The same faces continue to 'serve' on the boards of some of these finance houses where "appalling lending decisions" were made, in the Finance Minister's own words.
The dimensions of the problems at Anglo Irish Bank have caused consternation, but it has been the most open of the institutions about the abyss that yawns there. That's because an outsider was brought in to run it -- an Australian chief executive, Mike Aynsley.
Compare this with Bank of Ireland, which moved with indecent haste to appoint Richie Boucher as chief executive, even though his sector (he was head of retail banking) hadn't exactly covered itself with glory.
In July 2008, Boucher assured an Oireachtas committee: "If bad debts and the economy get worse, we believe we are sufficiently capitalised." Months later, Bank of Ireland received a €3.5bn bailout. His annual salary is in excess of €600,000, by the way.
AS FOR AIB, it claimed that it had hunted far and wide for a new chief executive and yet -- surprise, surprise -- the best man for the job was under its nose all along: Colm Doherty, head of the bank's capital markets. And now, the State has had to take a majority stake in AIB. Doherty's annual salary is €500,000.
Meanwhile, AIB says it can raise between €4bn and €5bn by selling overseas assets -- only afterwards will the taxpayer chip in. But the bank has continually overestimated everything, so we have no reason to believe this valuation now.
Any other institution might have learned some humility over the past 18 months. Not the banks. They still put their own interests first. How else do we interpret this week's mortgage rate hike from AIB, with two more rises signalled?
This is the same bank that doubled its lending between 2004 and 2008, at the peak of the boom. Now, it has finally figured out that it can't handle the fallout from such irresponsible lending and is clawing back money from customers. The taxpayer can't expect any benefit from owning most of AIB. Instead, we'll pay even more for banking services.
The banks thought the boom would last indefinitely. Then they thought there would be a soft landing. Next, they thought they could manage without raising new capital.
Yesterday, Brian Lenihan finally told them the game was up. But taxpayers are stumping up tens of billions because bankers got it wrong and then refused to take on board the sheer scope of the disaster.
Some encouragement can be taken from the fact we finally have someone on our side (and I don't mean the Government): Matthew Elderfield, the new Financial Regulator, whose insistence on a prudent level of capital reserves shows he is looking out for the economy, rather than the banks.
No wonder the country is divided. No wonder the public sector is angry over pay cuts. This has been sold to us as a step on the road to recovery.
From where I'm standing, however, there's a roadblock. It's manned by the bankers, who look as arrogant as ever -- even with their hands out.
- Martina Devlin
Irish Independent
