Tuesday 23 January 2018

Richie Boucher on Brexit, branching out and why the crash has changed banking forever

Bank of Ireland's Richie Boucher believes no one should be indispensible, writes Business Editor Samantha McCaughren

Bank of Ireland’s Richie Boucher. Photo: David Conachy
Bank of Ireland’s Richie Boucher. Photo: David Conachy
Samantha McCaughren

Samantha McCaughren

This weekend marks eight years in the top job at Bank of Ireland for Richie Boucher and his direct manner and distinctive Southern African tones have become the voice of the bank through some difficult times. Sitting in his corner office of Bank of Ireland's understated head office on Mespil Road, Boucher bemoans how his identity and the bank's have become so closely intertwined.

It annoys when people talk about 'Richie Boucher's Bank of Ireland', he says.

"This is a bank that's been around 200 years," he says. "It's going to be around for a lot more. I'm just one of the people who's been in this role."

In saying that, he plays down the importance of his role during one of the most difficult times in the bank's history. He has steered the bank back to robust health and said on Friday that a long anticipated return to dividends would begin next year.

However, it suggests that Boucher (58) is now thinking of life outside the financial institution, which was famously described as being Ireland 'least worst bank'.

When asked if he sees himself staying much longer in the job he says: "I won't be here forever and one of my jobs is to make sure that any transition is handled well, is handled smoothly and I think you've let yourself down and you've let your organisation down if the company becomes too dependent on one individual."

"That's the one thing I've learned in life: no one's indispensable. But creating the next rung of leadership is a very important part of what I have to do."

But it is just one of his many tasks.

The high-stakes days of the banking crisis may now be safely behind us, but plenty of concerns and worries still abound. The most immediate one is Brexit and wider concerns about the future of the Euro and the EU.

Boucher says uncertainty is always part of business. "I'm getting to the stage in my life where I've been in business quite a long time and there's always been uncertainty, there was never this time when everything was exactly calm.

"I was thinking when I starting my own business career, a very long time ago, interest rates were 17pc, you had a conflict in Northern Ireland, you had a real cold war between the United States and Russia, you had cruise missiles being put on borders.

"Your job in management is to kind of not get mesmerised, to try and understand what's going to happen - but you just can't stand still," he says.

That's not to say that Boucher and the bank do not analyse all the risks and their potential impact. However, he feels that after the turmoil of the past decade, the organisation is in a strong position to deal with whatever political uncertainty in the EU throws up.

"We have to have a lot of capital which enables us to survive in very severe downturns," he says.

The Brexit vote and the impact on sterling has affected Bank of Ireland, which has significant operations in Northern Ireland and the UK, where it has a partnership with the British Post Office. Business in Northern Ireland and the UK accounts for 40pc of its assets.

"I think the immediate impact for us is obviously the translation of our profits so our profits are worth less in euro terms," he says. On Friday, the bank reported underlying profit of €1.071bn for 2016, down from the €1.2bn in the previous year.

However, the overall impact of the Brexit vote has yet to have a wider negative effect, he said.

The bank is keeping a close eye on business customers. "They're a bit like us, they're just making a little bit less money than they would have but what we haven't seen in the obvious places that you'd expect - retail and hospitality in the border counties and the food and agriculture - we haven't seen any material sign of credit distress."

In spite of the currency issues, Boucher is a great believer in diversification for the business. At present, about 50pc of the bank's assets are in Ireland, 10pc in the US and continental Europe with the remaining in the UK. "I think that's an appropriate balance," he says.

But he adds that the bank would "always look at" acquisition opportunities and a €1bn investment in IT over the next four years will bolster its acquisition capability for the future.

"It gives us an optionality," he says. "If you're thinking of making an acquisition, nowadays key to it is having the IT capabilities that could enable you to integrate that with your systems."

Boucher, who lives in Clontarf on Dublin's Northside, has a geographically diverse background himself. His Irish father went to South Africa to play rugby and work in the mining industry. Boucher's mother later joined him from Ireland and Boucher was born in Zambia.

"We grew up in small mining towns and we all went to boarding school," he says. "We go back to Africa every now and then, I try and explain to my own children, you know, what it was like and it's like trying to describe some period in history. We had a very outdoor life, we spent a lot of time in the bush," he says.

Ireland was never far from his family's thoughts however. "I vividly remember as a kid, my father and a few of his pals would have an aerial, like a big copper wire aerial up some tree and we'd be listening to Micheál O'Hehir on the thing and they would be having a few beers. We'd be told that this is really good, this is brilliant."

"I certainly had a unique skill, I could name the Cavan 1948 Gaelic football team," he says.

He came to Ireland at the age of 18 and studied business in Trinity. Like his father, he played rugby and has got significant enjoyment out of the sport.

"When I came to Ireland I was a reasonable rugby player," he reflects.

Later, when his son was growing up he became involved in the local club in Clontarf. "You see the world from a different place," he says. " Like the under 7s against Naas, that's the most important thing in their lives, and it was, to be honest. If I look back on the things that I've really enjoyed, it was one I've really enjoyed most."

After college, Boucher went straight into Industrial Credit Corporation, the state business bank and later worked for a number of banks before joining Bank of Ireland in 2003.

Boucher is the only remaining bank executive from before the bank guarantee and he had endorsed property developer Sean Dunne's plans for Ballsbridge before the crash.

His association with the building boom meant the some people opposed his appointment to the role of ceo back in 2009. He, like many other bankers, were vilified in many circles for a time. Was that difficult? Boucher says others in the company had a worse time.

"I always try to put myself in the shoes of my colleagues who are really meeting the customers on the frontline. It's relative. There were some challenges for my family and all that kind of thing but it is what it is," he says.

He also faced challenges in 2014, when he was diagnosed with colon cancer. It was a routine check-up and, until then, he had never been sick. It wasn't easy for him to switch off, however, and he was plugged into work, even during treatment.

"I remember late one night I was in my room in the hospital , I had my iPad on and my iPhone and all that kind of thing and one of the nurses came in and just said 'can I just check something, Mr Boucher'? And then she grabbed the iPhone and the iPad and said 'I'm bringing these out to the nurses' station. You're to rest - you're a sick man.' He had little choice but to obey and is now fully recovered.

Boucher's single mindedness meant his focus for many years was paying back taxpayers' money given during the bailout.

"You have to have a higher order purpose in things. You have to get your earnings per share, you have to deal with all those things. With my shareholders you get fired pretty quickly if you don't.

"But there has to be a higher order of things, and for us, for four years, at the highest order was to repay the taxpayers."

It was a key milestone in 2013 when that was achieved.

"OK, it was important for us in the kind of rarefied atmosphere we occupied (in head office) but for my colleagues on the frontline, it was a hugely important thing for them, that they could probably start holding their heads up again."

He says he is "more than a little disappointed" that the bank could not declare the dividend this year. He said that volatility in European corporate bond yields impacted on pension scheme liabilities, but they have now recovered.

Boucher is looking forward to the long-awaited AIB flotation, another sign that the Irish banking system is normalised.

He will also be glad to see its rival return to the stock markets.

"We like to compete on a level playing pitch," he says.

While some competitors are relying less and less on the branch network, Boucher is committed to his branches, although they are becoming increasingly automated. "Cutting costs is just one side of the business. The more challenging thing is growing your revenue. If you're not physically on the ground, you're not building a relationship with the community, you're not identifying opportunities," he says.

There is more space in branches and Boucher says in some cases they are providing space for start-ups. This will help grow relationships into the future, he believes. The bank has been criticised for its attitude to debt forgiveness on mortgages, but Boucher defends its position. "Our job is to help people but we also have responsibilities to the 95pc of other people who are paying their mortgages, or depositors, our shareholders and everyone else.

"We've done 25,000 restructures, 90pc plus of them performing, and we think it's been the right way to go about things."

He has also defended an unpopular decision not to reduce variable rates on mortgages, as his preference is for people to move to fixed rates. Boucher says lending is gradually growing but remains cautious. "There's always this question of demand and viable demand," he says. "You have a responsibility to everyone, including your customers, that you think they can repay.

"We lent €6.7bn into the Irish economy last year. That's up about 14pc on the year before and you'd expect a similar kind of number next year."

Since the banking crisis, the sector has become much more heavily regulated with the State closely scrutinising activities. Boucher accepts this.

"We realised that we had to have a different type of relationship," he says. "We have to have a regular dialogue with the State. We're not saying we have to seek permission because we're a private sector company but when we're making strategic or other changes, it's appropriate we explain to the State our rationale and our thinking."

"We've made conscious decisions to operate in highly regulated businesses in highly regulated markets," he adds. "If we can get better at managing regulation in a more professional way than our competitors, then we have a competitive advantage."

He apologises ahead of using a sporting analogy, which his advisers often chastise him for but he feels it is appropriate.

"We're all on the pitch, we're all playing Gaelic football, we're not playing hurling, we're not playing rugby or anything. So we know how to play that game."

'I think what I would have done differently'

My business tip is ...

On the way home at night I always think about the day and I think 'OK, what went well today?' and if you had that day again, what would you have done slightly differently?

If I wasn't in banking ...

I would have been a businessperson of some kind or other. I don't really think my personality type or anything would suit different careers.

In my spare time ...

I like music, even though one of the reasons I kept my accent is I'm tone deaf but I listen to music quite a lot. I spend quite a lot of time watching sport and reading.

The most interesting book I have read recently is ...

The Undoing Project by Michael Lewis. It's a fascinating book about how the human mind works on a subconscious bias.

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