Monday 22 January 2018

Ten questions the bigwigs at BoI must answer

MIRACULOUS PROMOTION: Richie Boucher, chief executive of the Bank of Ireland, is the only current director to survive the property and banking crashes of 2007-2008. Photo: Steve Humphreys
MIRACULOUS PROMOTION: Richie Boucher, chief executive of the Bank of Ireland, is the only current director to survive the property and banking crashes of 2007-2008. Photo: Steve Humphreys

Shane Ross

QUESTION 1 The Background: The board of the Bank of Ireland has pulled a stroke. Its AGM is being held on Friday of Easter week. The school holidays will be in full swing. There will be no noise offstage from TDs as the Dail will be in recess. Few people will be around. The meeting has been called for 9.30am. Travellers from outside Dublin will be caught in the peak traffic. It is expected to be an altogether unpleasant experience. Only the most zealous or battered shareholders will turn up. A good start for the board: keep the numbers of the discontented down.

Question 1

Why have the directors called the meeting at 9.30 in the morning in Easter week?

Question 2 The background:

The chairman/governor has been publicly humiliated. Archie Kane is still in the saddle despite some unwelcome publicity since his controversial appointment. Poor Archie's past keeps coming back to haunt him. A few weeks ago Archie's deferred performance bonus from his last employer (Lloyds Bank) was clawed back for the third year in a row. Kane was head of the UK bank's insurance division during a period of mis-selling of Payment Protection Insurance (PPI). In 2011 he left Lloyds in a 'boardroom cull' – only to land in the top job at B of I! Lloyds has now provided €12bn for customers who had been sold these toxic products. Yet the Bank of Ireland is still keeping him in this part-time job on a package of €490,000 including €394,000 salary, plus a " consultancy" deal of €59,000 and €37,000 allowances for utilities, accommodation and a car.

Question 2

Ask the chair if he is embarrassed by his hat-trick of humiliations from Lloyds. Is his 'consultancy' to advise Bank of Ireland on PPI, as he had such experience in this dark area at Lloyds? With this background, what moral authority does he have to preside over a meeting of beaten shareholders ?

Question 3 The Background:

In 2011 Wilbur Ross – a director expected on Friday's podium – and his associates bought a 35 per cent stake in Bank of Ireland at 10 cent a share. Wilbur is a vulture investor. Last month he sold a third of his shareholding for 33 cent each. Ross has extracted his entire original investment from the Bank of Ireland and now holds his remaining stock for nothing. He has a free ride. Wilbur's intentions with the remaining holding are critical. Rumours in the market suggest that he has promised not to sell before June 25. Wilbur does not hang around earning goodwill. He is not in Ireland on a mission of mercy. Do not be surprised if Wilbur sends apologies for his absence.

Question Number 3

But if he is there, ask Wilbur specifically what his intentions are for his remaining massive holding? If he refuses to promise to hold on for several years, fasten your safety belts.

Question 4 The background:

The share price shot up to 39 cents prior to the results a few weeks ago. Then clever Wilbur dumped his stock at 33 cents. The market has seen the danger of Wilbur dumping even more stock. The price has slumped to 28 cents. The market is equally aware of another seller: Minister for Finance Michael Noonan holds 15 per cent of the bank and is threatening to sell the entire holding.

Question 4

Ask the Governor about his understanding of the Government's intentions. Does the bank have buyers lined up to take Noonan's shares or will they be placed in the market at a huge discount, making the shares tumble further?

Question 5 The Background:

When in opposition Fine Gael and Labour thundered against high bank salaries. Last year, when in government, they refused to cast their 15 per cent vote against the €843,000 package for chief executive Richie Boucher. This year they have a chance to redeem themselves and to vote against the remuneration report, including this outrageous reward to the boss. Last week in the Dail Minister Noonan was comically coy about revealing his voting intentions, feebly asserting that all the resolutions would go through whatever his decision.

Question 5

Ask Governor Kane whether the State's 15 per cent vote has been cast in favour of the remuneration report. Has Noonan opposed any of the resolutions put to the AGM? Ahem.

Question 6 The Background:

The relationship between Noonan and the directors is intriguing. Richie Boucher is the only current director to survive the property and banking crashes of 2007/2008. His miraculous promotion – despite being an insider – to the top job in 2009, stands as a monument to government tolerance of longevity in pivotal banking jobs. Boucher and other directors come up for re-election on Friday. They include the governor himself, Wilbur Ross and Kent Atkinson, coincidentally Kane's former chum on the board of Lloyds.

Question 6

Has the Government voted for the re-election of all the non-executive directors despite the obvious embarrassments associated with Kane and Boucher remaining in the key posts?

Question 7 The background:

After the crash the Government appointed two "public interest" directors to the Bank of Ireland board. The choice was incredible. More incredible is that they are still there. One is Fianna Fail loyalist Joe Walsh, 70, minister in Bertie's 2002-2007 government. The other is Tom Considine, 69, former secretary- general of the now discredited Department of Finance and a director of the Central Bank and the Financial Services Authority in the bad old days. Neither is ever required to stand for re-election! Last year Considine earned €98,000 in fees while Walsh took away a mere €90,000 from this bankrupt entity. No wonder we shareholders are feeling sore. According to the annual report "a description of the skills and expertise brought to the board by these appointments was not provided by the Government". How embarrassing.

Question 7

Ask all the directors, one by one, if they could expand on the eulogy in the annual report to the two lucky guys lauding their "Judgment and quality of contribution". Is this the best they could do? Then ask both Joe and Tom to tell the meeting how they deserved over €90,000 each in 2013, slaving in the public interest.

Question 8 Background:

Ireland is in the middle of a mortgage crisis. Mortgage debt has rocketed and banks are seeking solutions. Repossessions are in the air. Most banks, including AIB, Ulster and Permanent TSB, have agreed to allow stretched house owners to write off some debt. Not Bank of Ireland. In the world of Richie Boucher and Archie Kane there will be no write -offs.

Question 8

Ask Walsh and Considine how it is it in the "public interest" that their bank will lead the charge to evict residents from their homes.

Question 9 Background:

Following a balance-sheet assessment, the Central Bank has required B of I to make extra provisions of €1.3bn in case of bad loans. The Bank of Ireland is widely reported as having given the regulator the two fingers, once again.

Question 9

Ask Archie Kane does this underprovisioning threaten the future of Bank of Ireland? Does it mean that the far stricter ECB stress tests later this year will insist on further recapitalisation? Where will the capital come from?

Question 10 Background:

In Ireland, failed bankers are rewarded with golden handshakes and huge pensions. In the UK they receive knighthoods and eternal riches.

Question 10

Ask Archie Kane if he is eyeing the double? When is he expecting a knighthood for his 'services to banking' at Lloyds and a golden goodbye for his sterling work in the Bank of Ireland?

Sunday Indo Business

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