Inside the world of business
Not banking on kept promises
FORMER TAOISEACH Bertie Ahern caused a stir when he famously told the planning tribunal he didn’t have an active bank account when he was minister for finance.
For 300,000 households, though, or a fifth of all households, that is the reality – or at least it was in 2008, the last year figures are available. A report by the ESRI on Financial Exclusion and Over-Indebtedness in Irish Households shows only Greece and Italy, among the old EU states, have a lower percentage of bank accounts per household.
Irish households face the same kind of “financial and banking exclusion” as some of the newer EU states such as Bulgaria, Romania, Lithuania and Poland. Does this matter?
For groups facing the highest levels of “financial exclusion”, which includes the elderly, poor and disabled, lack of access to a bank account can mean paying more to make transactions. They can also face difficulties when paying bills and receiving their wages or welfare payments. So what is being done?
Back in 2008, when the banks were thrown a lifeline by taxpayers through recapitalisation, they committed themselves to introducing a basic bank account for people facing “financial exclusion”. But as with other promises made by the banks during the height of the banking crisis, two years later and we’re still waiting for delivery.
Discussions between the banks and the Department of Finance are continuing; Brian Lenihan said recently he expected a product to be launched by the end of the year.
One potential sticking point is a banking industry demand that more welfare payments are paid by the State directly into bank accounts rather than through An Post to help compensate for the new basic bank account product.
This is not an attractive prospect for State-owned An Post. In the meantime, the risk of “financial exclusion” is likely to rise following Bank of Ireland’s decision to introduce charges for many of its current account customers.
IL&P directors on their way to departures
HE IS the chairman of NCB Stockbrokers, she’s the chairwoman of O2.
Having each served two full terms as non-executive directors of Irish Life Permanent, they have decided not to stand for re-election to its board, “in line with good corporate governance practice”.
Indeed, as Breffni Byrne and Danuta Gray will both be aware, the voluntary code of practice for listed companies – known as the Combined Code – stipulates that directors should not serve more than two terms of three years.
Both Byrne and Gray were appointed to the board in summer 2004, so their time is indeed up.
This is just as well as it wouldn’t be good to be seen to be forced out of a nice directorship by an incoming Government which is promising to “restructure bank boards and replace directors who presided over failed lending practices”.
The departure of Byrne, Gray and ILP chairwoman Gillian Bowler from its board throws up two interesting features.
First of all, only three of the 12 board members now predate the Government banking guarantee of September 2008.
They are Kevin Murphy, who in 2009 was elevated to group chief executive; Roy Keenan, who was appointed a non-executive director in October 2006, and Ciarán Long, who has been company secretary since 2004.
These remaining directors will have to wait and see if the Fine Gael-Labour coalition makes good its promise.
The other interesting aspect of the departures is that it will reverse what was an admirable record of appointing women to the board of ILP.
A third of its board are women – well ahead of the 12 per cent average among Europe’s largest companies cited in despair last week by EU justice commissioner Viviane Reding.
Maintaining that balance will be another challenge for the bank.
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