Bank of Ireland chief to ring-fence €1bn for housing development
McDonagh targets shovel-ready projects in 'challenging' property market
Bank of Ireland's new chief executive, Francesca McDonagh, says the country's largest lender by assets has a €1bn dedicated property fund to lend to shovel-ready construction projects.
The vast bulk (80pc) of the property fund will be used to lend to residential housing developments, including purpose-built student accommodation as well as commercial real estate in the Republic.
"It is a challenging market," said McDonagh in her first interview since succeeding former Bank of Ireland CEO Richie Boucher last October.
McDonagh (43), who presides over her first year-end results next month, had just begun her tenure as Bank of Ireland's first-ever female CEO, when the €1bn industry-wide tracker-mortgage scandal reached a crisis point.
Bank of Ireland, which has one of the highest variable mortgage rates in the country, initially said it had 4,300 customers affected by the tracker scandal.
However, within weeks of her appointment, McDonagh declared an additional 6,000 customers were affected, apologising "unreservedly".
The former HSBC executive, who is set to deliver Bank of Ireland's first dividend in 10 years, says that the lender aims to have completed the process of compensating more than 10,000 tracker customers by the end of March.
McDonagh, who said growth in the mortgage market will be a "key driver" for the lender, said delivery of new homes is of strategic importance to Bank of Ireland in assisting with the delivery of critical social infrastructure that will support the continued sustainable economic growth in the country.
"We are well-positioned to support increased output on shovel-ready developments," said McDonagh.
After a tumultuous start, McDonagh - who supports a lifting of the cap on bankers' pay over time - has won praise in government and investment circles for her handling of the tracker scandal. The London-born banker, whose grandparents are Irish, has also revealed that she has applied for an Irish passport under the so-called 'granny' rule.
McDonagh said while Brexit and related currency fluctuations may affect the reporting of its business in the UK, where it has 40pc of its loan book, its underlying profitability was unchanged.
"I spend more time thinking about what opportunities there are for organisations that want to use financial services in the Republic of Ireland," she said. The main Brexit issue for businesses is uncertainty, she added.
Sunday Indo Business