# Heads to Roll in Irish Banking sector?



## dieter1 (3 Dec 2008)

I've been following this like everyone else in the last 18 months, seeing our banks being brought to their knees. Surely its time for the top brass in some of these banks to go? Other countries in Europe, the US and Japan have all been firing the senior management teams for non-performance. Why haven't the irish banks being making ANY changes. Take BOI for example, they took a 500mn charge today (it was on Todayfm- ffs) and yet these the senior managers are all happily continuing to receive huge payments and massive pension contributions. My salary has been cut recently (small service company), my wifes has too, as has probably 50% of my friends (none of which are in banking), quite a few have been layed off altogether.

I firmly plant responsibility for this crisis in Ireland with the banks and builders, the builders are getting their payback now, isn't it time the leaders of the banks were removed?

If this was Japan, we'd be seeing David Drumm and Eugene Sheehy bawling their eyes out saying sorry on national tv and resigning their posts, thats what the public want!


----------



## PaddyW (3 Dec 2008)

They should be fired, in my opinion. They are very slow to let the goverment recapitalise them (Eugene Sheehy saying he'd rather die first). They will bring the banks to their deaths eventually if something is not done.


----------



## ccbkd (3 Dec 2008)

If it was the USA - they would be fired and to boot they would get a good horse kicking down at their local Gym -like the Lehman boss a few months back, ah I can picture it now Brian Goggins on the treadmill in his local Foxrock luxury Gym when a disgruntled employee punches Goggin square in the Noggin...


----------



## PaddyW (3 Dec 2008)

Did that really happen? I'd pay to see that happen to one of our fellas!


----------



## VOR (3 Dec 2008)

How many heads rolled for the Rusnak affair???


----------



## richard2656 (3 Dec 2008)

apologies for my pedantry, but it was anglo and not boi that took the €500mill charge


----------



## mainasia (5 Dec 2008)

Yeah, they should be booted out. Conmen. These guys get paid so much annually, salary and bonuses, they don't worry about next year. Even if they lose their jobs it's not a big deal, they rake in enough in a few years to keep them giong for life. NO BAILOUT FOR ANGLO.


----------



## mainasia (5 Dec 2008)

'In 2007, Mr Drumm received a basic salary of €956,000 and an *annual performance bonus* of *€2m*. His total remuneration, including pension benefits, was *€3.27m*. The previous year, he received a basic salary of €818,000 and a *bonus* of *€1.3m*. Total remuneration was just over €3m.
Five executive directors, including Mr Drumm, were paid a total of €8.5m in 2007.'


Is this reporter on somebody's payroll, why no critical analysis of press releases?
http://www.independent.ie/business/...-as-bosses-forgo---their-bonuses-1562936.html
THERE WILL BE JOB LOSSES AND POSSIBLY BANKRUPTCY

http://www.independent.ie/business/...e-83642bnplus-to-cover-bad-debts-1562934.html

'Speaking to analysts and journalists separately yesterday, the bank's chief risk officer and finance director, Willie McAteer, warned that in a worst-case scenario Anglo Irish Bank could lose between €1.28bn and €2.76bn in loan write-offs over the next three years.
He clarified that such losses would only arise in a "very distressed" situation. 
His stress test was based on the prediction that in the highest potential losses would be incurred on its €8.9bn residential loan book, and with between 20pc and 30pc of its €7.9bn commercial development loan book resulting in losses.'

What does he think this is, relaxed situation ? Spoofers. Why do they still have a job ?


----------



## roland (15 Dec 2008)

The head guys should probably leave given the universally awful share price performance they have presided over, but let's put the add up all their salaries into some perspective.  In almost all cases these same 'fat cats' will have made enormous losses on their share portfolios and share options, and in a lot of cases salaries would have been used to purchase more shares.  Yes I'm sure none are going to go hungry but it is unbalanced reporting to only look at what they have earned in income without acknowledging what has gone out on the other side.


----------



## mainasia (16 Dec 2008)

How do you know they used to purchase more shares? Isn't that irrelevant anyway? Why should they probably leave their jobs when they have destroyed their companies and shareholders value, what planet are you living on. They earned their annual high salaries and bonueses from delayed loan pay back schemes.


----------



## z109 (16 Dec 2008)

mainasia said:


> How do you know they used to purchase more shares?


It's a matter of public record what the directors' shareholdings are.


----------



## SteH (16 Dec 2008)

Even if these guys were solid leaders and had the ability to sort out their shops it is a matter of confidence in the sector and in the government (as they own the banks now or at least the debt). They should step aside, they don't even have to leave the companies, just the boards. It is time and it will happen.


----------



## Sunny (17 Dec 2008)

I think there should be changes at the top of the banks but probably notfor the same reasons as the rest of you. I don't personally blame the heads of the various banks for all of this mess. They were one part of a chain that extends from the Government to the regulator to the banks to the man on the street. 

The reason that there should be changes is that the banks need a clean sweep. They need somebody that is able to come in, go through the books and clean up everything. A new person can do this because they can blame all the bad news that is inevitable on the previous regime. If you leave the same people in charge now, it is human nature that they would be reluctant to make big decisions necessary as quickly as they should as they know the backlash they would face. 

This is the reason that there should be changes, not out of some desire for revenge or a bloodthirst and I speak as a BOI shareholder.


----------



## D.S. (17 Dec 2008)

Most of the talk about replacing the boards seems to be out of some sort of need for revenge or to have someone to blame. It feels v much like a public witch hunt.

However, as Sunny has said, the bank boards are not the primary reason for the whole mess. The Government are just as culpable in that they incentivised excessive demand for Home Ownership which they did because they were being pressurised by the public. The public's fascination with Home Ownership and the Builders monopoly on the Dublin property market ( meaning a severe concentration of risk) are also huge factors in this story. The regulatory system for capital adequacy was completely inadequate to safeguard the financial system and you could even go as far to say that current accounting rules and the way bank boards satisify shareholder interest is short-medium term in focus and not necessarily in line with safeguarding financial stability.

What people need to remember is that there are two seperate problems - illiquidity in the financial system which has stopped the flow of credit and an increasing exposure to credit risk.

Being exposed to credit risk is not necessarily a bad thing if 1) your bad debt charges remain low, or 2) you have sufficiently hedged the risk, or 3) you have set aside enough capital to cover that risk, among other mitigating activities.

The only boards that may need to go are those that did not manage their credit risk exposure correctly and are at a serious risk of insolvency because of it.

People seem to be tarnishing all banks with the same brush. Some banks are primarily experiencing problems with capital adequacy and liquidity as a result of problems in the financial system. Nobody could of forseen this, the reasons for the problem lie globally with regards to the make-up and management of the system.

The Boards of Irish Banks who are 1) overexposed to credit risk and 2) are unable to manage this risk sufficiently are the ones that should be under review. Being exposed to credit risk and managing that risk is what banking is all about. It is one of the fundamental capabilities of the banking industry. This is where the examination needs to start.

Talk of sacking/replacing boards is v vague and without sound justification. Replacing current boards won't be a good thing either unless the existing shareholders can be sure the incoming management have sufficient skill/knowledge to manage the problems of illiquidity and credit risk.


----------



## beekeeper (17 Dec 2008)

One bank that i which i dont feel is necessary at this point to name is effectively "gone".  If the government had acted proactively instead of jumping in with the guarantee and replaced its board it is very possible thatsame bankwould have had a beter chance of surviving. 

Now as it stands Ireland inc are paying for this guarantee in the form of debt downgrades when theyshould ave just let market forces dictate.  The guarantee has had a limited effect... if anything it has just prolonged the obvious whilst hurting the tax payer.  

As far as i can see its a very tight club the politicians and senior bankers have and at some stage the party will stop.  The longer it goes on the bigger the fall will be for everybody !!


----------



## rmelly (17 Dec 2008)

I'm not sure we are that different:

[broken link removed]

I recall a number of similar stories on bonuses e.g. Lehman UK employees got bonuses that matched last years AFTER the collapse.

Plus the heads of some of the banks have pocketed tens of millions (or more) in severance packages. A few were shamed into returning token amounts after congressional hearings, but most didn't budge.


----------



## upport (17 Dec 2008)

Great post D.S.


----------



## Ann1 (17 Dec 2008)

This question may sound a little 'brainless' but if the top guys in the two main banks were to be fired who would actually do the deed. Would it be the government... the financial regulator....or would it happen from within the banks. Sorry but its a bit difficult to follow who is actually IN CHARGE at the moment.


----------



## z109 (17 Dec 2008)

Ann1 said:


> Sorry but its a bit difficult to follow who is actually IN CHARGE at the moment.


 You are dead right. What answer do you suspect? (Mine is 2-3, n something - o something something; what you might say about both teams in a drawn match).


----------



## Spondulicks (31 Jan 2009)

Perhaps you might get some good applicants if you advertised jobs like those with even half the current benefit package. Is that not how how the executive labour market works in that good benefits attract good people? Or is it the case the exorbitant remuneration is only for the current holders and is not a true reflection of ability at all at all. Maybe someone might enlighten us all on the dark arts in this sphere?


----------

