For the second time in a week, Bank of Ireland chief executive Richie Boucher and solicitor Brian O'Donnell were in the same room but this time there were no keys exchanged and no interruptions from the Gorse Hill lodger. O'Donnell sat quietly in the public gallery of the Oireachtas Banking Inquiry taking notes, his appearance an unnecessary sideshow to the main event.
Boucher gave a frank and robust account of his role as head of the Irish retail business at Bank of Ireland in the run-up to the financial crash in 2008. He also provided colour around the frenzied events of September 2008 in Irish financial circles.
Boucher has been around the block a couple of times but he was “shocked and shaken” at a meeting with the Central Bank on September 7th, 2008, by the lack of information available to executives at Irish Nationwide Building Society (INBS) and the regulator about the building society’s liquidity position.
Bank of Ireland was asked that day if it might be able to lend €4 billion to INBS to tide it over. Boucher immediately wanted to head for the exit rather than get drawn into a long conversation to persuade them to give INBS a dig out.
“We were very uncomfortable taking on an exposure to that entity,” he told the committee. And rightly so as it turned out. Interestingly, Irish Nationwide supremo Michael Fingleton did not attend that meeting.
Boucher was not “on the pitch” on the night of the bank guarantee decision in September 29th, 2008. He was in the dug out awaiting instructions from then chief executive Brian Goggin.
“Amongst other things, one of my jobs was to ensure, for example, that our branches were properly staffed,” he said. “We were making sure our ATMs were heavily loaded, because if there had been an incident which would have perceived that we had a lack of cash, that could have been very difficult.”
Boucher was “surprised” the guarantee “went beyond senior debt”. He was also surprised to hear Goggin’s testimony last week to the effect that he had lobbied for dated subordinated debt to be included in the guarantee. But he accepted it was a “stressed situation” involving difficult calls.
Boucher admitted that some of Bank of Ireland’s decisions around mortgages and property lending were a result of it trying to mimic the competition to avoid losing market share. He dropped the ball on 100 per cent mortgages and he accepted there was a lack of peripheral vision at board level as to what was going on in the financial sector, while insufficient credit risk information was provided to the board. The position now compared to then was like “night and day”, he added.
Later, Cormac McCarthy, who led Ulster Bank for seven years up to May 2011, gave a polished performance. He apologised for the distress inflicted on customers of the bank from the collapse of the financial sector and acknowledged that Ulster Bank had been over exposed to property during his tenure.
He refused to answers questions about Ulster Bank’s loans to Seán Dunne for his purchase of two Ballsbridge hotels, a site that did not have planning permission.
McCarthy also refused to be cornered on the size of RBS’s bailout of Ulster Bank, which is effectively a UK taxpayer bailout. He said the full sum, which RBS itself had put at £15 billion, would not be known for some time given that the bank had begun writing back some of its provisions and certain assets were being sold. This will be of little comfort to British taxpayers.
