Inside the world of business

Kennedy clan’s role in Irish banking epic

ONLY THE involvement of the powerful Irish-American Kennedy clan could complete the epic recent history of Irish banking.

And, lo and behold, here it is. The genesis of the recent North American investment in Bank of Ireland was a conversation between Californian businessman Bill McMorrow and his friend Bobby Shriver, nephew of JFK.

McMorrow, who runs Kennedy Wilson, and Shriver, now a senior adviser at the Beverly Hills firm, were chatting last year about where they should invest.

Given their respective heritage, the conversation turned to Ireland, according to McMorrow.

The men travelled to Ireland for an intensive week of meetings in December 2010, he said. It was McMorrow’s first visit to the old sod; Shriver (son of JFK’s sister, Eunice) had been here before.

In June, McMorrow bought a business from Bank of Ireland that manages about €1.6 billion of commercial property in Europe. In a discussion on the closure of that deal, McMorrow chatted with Bank of Ireland chief executive Richie Boucher and says he was taken with the bank’s story.

McMorrow flew to Toronto to meet Prem Watsa – dubbed the Canadian Warren Buffett – and within three weeks the €1.1 billion deal led by Watsa’s firm Fairfax and involving three other US companies had been agreed.

If Bank of Ireland needs more capital to meet the new European stress tests, it could be looking to McMorrow, Shriver and more of the Irish diaspora to sell its case to investors.

IBOA may have jumped the gun

IT LOOKS like the Irish Bank Officials Association (IBOA) may have jumped the gun in its efforts to secure the most favourable redundancy deal for its members at Bank of Ireland.

The bank is in the process of cutting its workforce by 750 and has been negotiating terms for those layoffs with the union. Originally, a package of eight weeks per year of service, including statutory entitlements, was agreed – only for the Department of Finance to send both parties back to the negotiating table.

The two sides returned with their current proposal – six weeks per year, including statutory redundancy.

The IBOA yesterday issued a statement effectively denying that the department had rejected this, saying Merrion Street had not told either it or the bank that it would not approve the deal.

The union is perhaps emboldened by Bank of Ireland’s new status as the only mainstream Irish lender outside the control of the State.

However, the word is that the department has no intention of sanctioning the package. The State still owns 15 per cent of the bank, having invested €4.2 billion of taxpayers’ money to keep it afloat, and the department has already instructed the other banks to keep the terms of their redundancy packages in line with or below those prevailing in the public sector.

The most recent benchmark is a package offered by the HSE which, though a slightly more complex deal, essentially offered two weeks’ statutory redundancy pay plus two weeks extra.

The department says it has made its views clear to both the union and the bank.

IBOA general secretary Larry Broderick says staff have already made considerable sacrifices. That’s true, but asking workers elsewhere – including those receiving only statutory redundancy for an economic collapse greatly exacerbated by the banks – to accept an enhanced redundancy programme for bank staff is a bit rich.

Don’t be surprised if the IBOA and the bank have to return to the table once again.