Get bankers' snouts out of public trough
Issued : 18 April 2010
Sunday Times
They just don't get it, do they? Nothing it seems can put a stop to the streak of unadulterated greed that runs through Irish banks. Public anger doesn't affect bankers and neither does finger-wagging from politicians, or even huffing and puffing from regulators.
The banks are directly responsible for the collapse of the country's financial system and depend entirely on the state for their continued existence. They benefited enormously from the government's decision to guarantee all deposits, regardless of size, for two years in September 2008 (total value: €480 billion) and they have enjoyed billions of euros in cash injections since then, courtesy of the taxpayer. Under normal circumstances the public might expect that all this largesse would result in a less arrogant banking sector. Instead, for bankers, life goes on as before.
The public continues to rage at the scale of the Anglo Irish Bank rescue plan, and rightly so. The €22 billion cost of the venture is quite obscene and troubling. But you don't have to see billions being wasted to feel anger at the behaviour of bankers.
The revelation that Richie Boucher, the chief executive of Bank of Ireland, had his pension "topped up" by almost €1.5m last year is quite breathtaking. Bank of Ireland likes to present itself as the least worst of the banks in terms of its difficulties, but that relative argument is immaterial. The bank has already received €3.5 billion in fresh capital from the state and will require many more billions if it fails to raise fresh capital by selling a number of assets. Bank of Ireland, therefore, is very much beholden to the taxpayers, but from the behaviour of the board in approving this payment to Mr Boucher you wouldn't know it.
Last year Mr Boucher received total remuneration of €1.99m, including the pension payment. According to his employer, the pension payment was to meet contractual arrangements that now include an option to retire at age 55 on a pension worth 59% of his salary. Mr Boucher currently earns €623,000 so, thanks to the largesse of the taxpayer, he can retire in four years' time with a pension of €367,570.
The Irish Bank Officials' Association is "shocked" by Mr Boucher's pension entitlements, and with good reason. Some 18,000 bank officials are currently being balloted on plans to cut their pension entitlements as part of the effort to reduce a €1.6 billion deficit in the pension scheme. Mr Boucher and the board are hardly setting an example.
The bank claims that Mr Boucher's pension has received all the "appropriate" approvals from the Department of Finance as well as the National Pensions Reserve Fund, which holds the state's 15.7% interest in Bank of Ireland following last year's capital injection. Again, this is not a surprise. The country's top civil servants are also great believers in the notion that cuts start at the bottom. These are the same people who convinced Brian Lenihan, the finance minister, that their six-figure salaries should not be cut to the same extent as other public servants' following last year's budget.
An influential cadre of 600 civil servants argued that they had already lost bonuses and that this should be taken into account when adjusting their salaries. The fact that civil servants considered bonuses as part of their entitlement, rather than something earned for exceptional performance, sums up the ethos that has infected the public sector. Perhaps bankers are still inserting their snouts in the trough mid-recession because they now see themselves as part of the elite corps of the public sector.
