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Bank of Ireland CEO: 'We can repay people financially, but not morally'

Richie Boucher said bankers’ pre-crash salaries were “relatively generous”.

Richie Boucher
Richie Boucher

Updated: 1.28pm

THE GROUP CEO of Bank of Ireland (BOI) told the banking inquiry the organisation can repay Irish taxpayers financially, but not morally.

Richie Boucher said: “We can never fully repay in moral terms, we’ve tried to do it in financial terms.”

He said he hopes changes at BOI post-crash will mean people can have more confidence in how the bank operates.

Boucher said salaries and bonuses at the organisation were “relatively generous compared to other industries” before the crash, but not out of line with other banks.

In a move away from normal proceedings, Boucher didn’t read an opening statement and members of the committee immediately began questioning him.

In his written statement, he said:

“While it is difficult to look back even with the benefit of hindsight into what may or may not have influenced motivation and behaviours some seven or more years ago and in a different environment, I personally do not believe that incentivisation or remuneration was amongst the most significant contributory factors to the mistakes and errors of judgement which Bank of Ireland, its Board and its management team made.”

Boucher, who is paid a salary of €843,000, joined the bank in December 2003 and was appointed group CEO in February 2009.

When asked about some of the bank’s policies, Boucher said BOI was “absolutely” over-dependent on lending in terms of property and land, noting: “We certainly were overexposed.”

He also said it was “wrong” to grant 100% mortgages and write in support of clients’ planning applications.

Seán Dunne

Later in the meeting, Boucher described the letter he sent to Dublin City Council in 2007 in support of Seán Dunne’s planning application for the former Jury’s site in Ballsbridge as “one of the many stupid things I’ve done”.

Boucher wouldn’t be drawn on why he intervened in this instance, saying he doesn’t have the same immunity from legal action abroad as inquiry members.

He said the “mistakes and errors of judgement” made by Bank of Ireland “were similar in some or all respects to those made by virtually all banks operating in Ireland in the period 2000–2008 and by a very large number of banks internationally”.

michael mcgrath Michael McGrath, Fianna Fáil's finance spokesperson, questioning Boucher. Source: Oireachtas.ie

Boucher said that, upon reflection, he believes the bank’s board “cannot feel pressurised to take on risks or follow business models with which they are not comfortable”.

In his written statement, Boucher said the board “cannot stray into risks or inappropriate business models because they cannot deliver within stated strategy” or to try to achieve “temporary but unsustainable out-performance” of its peers.

On the night of the bank guarantee, 29 September 2008, Boucher said BOI didn’t feel it needed a guarantee as it had “very significant collateral” – 50% of which was in the form of mortgages in Ireland and the UK.

Boucher said it was his “clear recollection” that a “systemic guarantee” including Anglo Irish Bank was discussed that night.

This evidence contrasts details given by Former AIB chair Dermot Gleeson to the banking inquiry last month, when he said AIB and BOI  favoured a guarantee that would only cover four institutions – not Anglo or Irish Nationwide.

Boucher wasn’t present at the meeting in government buildings that night, instead staying at BOI headquarters. “I wasn’t on the pitch, I was in the dugouts,” he noted on more than one occasion.

I recall that the Group CEO contacted us later by phone conference call to advise that the government had decided to provide a systemic guarantee for all deposits and liabilities.
I recall that during the day of 30 September 2008 colleagues advised me that notwithstanding that we had repositioned our portfolios to be able to lend €5 billion to Anglo Irish Bank, this money was no longer required.

Boucher said he was “surprised” to hear his predecessor Brian Goggin say BOI wanted junior debt guaranteed.

Solicitor Brian O’Donnell of Gorse Hill was present at the meeting. Cormac McCarthy, former Group Chief Executive and Director of Ulster Bank, is due to appear before the committee this afternoon.

Last week Goggin told the committee the day of the bank guarantee on 29 September 2008 was the worst day of his life.

Originally published: 10.41

More from the banking inquiry:

Trichet denies telling Brian Lenihan to ‘save your banks at all costs’

Former AIB chief: ‘I’m very sorry … I feel deeply disappointed every day’

Former BOI boss says night of bank guarantee was the worst day of his life

About the author:

Órla Ryan

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