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McDonagh presses again for removal of banker pay caps as she readies Bank of Ireland departure

BoI reported underlying profit of €419m for the first half of the year, down from €465m for the same period in 2021

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Francesca McDonagh, CEO, Bank of Ireland

Francesca McDonagh, CEO, Bank of Ireland

Francesca McDonagh, CEO, Bank of Ireland

Departing Bank of Ireland chief executive Francesca McDonagh has fired a parting shot criticising bankers’ pay caps before taking up a more lucrative job in Switzerland.

Ms McDonagh, who is leaving for a senior role at Credit Suisse in two months, said yesterday that limits on banker salaries and a ban on bonuses “ought to be lifted” for Bank of Ireland employees.

She said the bank had made a submission to the Department of Finance’s Retail Banking Review calling for the pay cap to be lifted.

A key message in the submission was that Bank of Ireland would be fully privatised by the end of the year and had returned €6.5bn to the State since being rescued in 2011 for €4.8bn.

“It’s not just for highly paid roles like the CEO or CFO,” Ms McDonagh said. “It’s also for the 9,000 colleagues at the bank. We can’t properly reward excellent performance or include new benefits in compensation packages.”

She said the pay restrictions, which keep salaries under €500,000 and do not allow bonuses to be paid, meant that the bank was struggling to compete for talent with unconstrained companies in other sectors.

Bank of Ireland has lost senior executives to higher paying jobs in CRH and Musgrave in recent years, prompting criticism of the pay caps from the bank.

Ms McDonagh’s comments came as Bank of Ireland reported underlying profit of €419m for the first half of the year, down from €465m for the same period in 2021.

Total income for the first half of the year was also “modestly higher” than the same period last year. Business income rose 16pc compared to the first half of 2021, which was attributed to the recovery from the pandemic.

New lending at the bank was up 7pc compared to the same period last year. Lending in the UK retail banking division decreased by 19pc, however, driven by a reduction in mortgages, as well as a “strategic focus on value over volume”.

Costs at the group rose by 1pc in the first half of 2022 compared to the first half of 2021. Costs are 1pc below when the purchase of Davy and one-off investments following the planned exits of other banks are excluded, it said.

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Meanwhile, customer loan volumes were €74.6bn at the end of June, €1.7bn lower than volumes recorded in December 2021.

The bank’s loan book grew by €1bn on a constant currency basis, excluding planned UK deleveraging of €2bn and a non-performing loan transaction of €100m.

The bank is set to appoint an interim CEO.


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