Ross Maguire: "Bank bashing has gone too far in Ireland"

[noproblem]

Makes me smile really when you see a man coming into the top of the Irish banking system from down under with the approval of the Irish Minister of Finance, although he's the subject of possible incompetence in his own country. Pay them peanuts and you'll get monkeys, pay them with extra peanuts and you're fairly sure to get bigger monkeys with more intricate tricks. Didn't have to go searching around the world to find someone like that.

 

[NoRegretsCoyote]

True, but AIB or BOI are not doing anything earth shattering.
I presume the bulk of those being paid over €1mm in the EU are in Investment Banking rather than vanilla mortgage banking.

I don't do anything earth-shattering but I'm still paid the market rate for my job. If I wasn't I'd probably look elsewhere.

BoI and AIB are top 100 by balance sheet in the EU from what I can tell, yet CEOs are probably not even in the top 3000 best-paid bankers.

 

[Bronte]

My point is that decision-making in banks was so layered (with dozens of people involved) that no one person was individually responsible.


There were a few cases of misreporting at Irish banks but these were responsible for a very small % of the overall losses.


Banks lost a lot of money by lending money that would never be repaid. Being bad at your job is not a crime.

My husband worked in a job involved contracts worth millions. If he was bad at his job he would have been fired. That’s called being fired for being bad at your job. We’ve seen people fired after relocation abroad with their families. Being given 10 minutes to pick up their stuff from their desk, supervised by security and brought to the door.

 

[Bronte]

True, but AIB or BOI are not doing anything earth shattering.
I presume the bulk of those being paid over €1mm in the EU are in Investment Banking rather than vanilla mortgage banking.
And there's plenty of people to take on the role at that level even if they may depart shortly thereafter. Until they're no longer partly state owned the CEO positions are really only caretaker positions.

If they’re so underpaid isn’t it odd why they aren't moving en masse to better paid jobs.

 

[NoRegretsCoyote]

If they’re so underpaid isn’t it odd why they aren't moving en masse to better paid jobs.

AIB have recently lost a CEO and CFO to (presumably) better paid jobs.

 

[Dazzler123]

To those persons looking for people to be fired for incompetence theres a few reasons as to why this never happened. The bad underwriting decisions need to be looked in the context of the information at the time. They may not have appeared to be bad decisions at the time.

Aldo i suspect people have been fired or quietly moved on, but its just that you never heard. For example i know of a head of compliance who was moved on in the wake of the tracker scandal in one particular pillar bank, before the scandal broke in a big way. The reason for the move was a commonly known secret.

Also, as stated above...underwriting decisions are made with seversl layers of oversight. No one person in general is responsible for any one decision.

Finally...bad underwriting decisions are not gross negligence or sackable offences and so it would be very difficult to fire someone if they followed internal procedures and made a juddhement call only

 

[Andy836]

AIB have recently lost a CEO and CFO to (presumably) better paid jobs.

They lost their last two CEOs - David Duffy, before Byrne, went to Clydesdale - his salary in Clyesdale was more than GBP 2mm per annun in 2016 & 2017.

 

[Andy836]

I don't do anything earth-shattering but I'm still paid the market rate for my job. If I wasn't I'd probably look elsewhere.

BoI and AIB are top 100 by balance sheet in the EU from what I can tell, yet CEOs are probably not even in the top 3000 best-paid bankers.

That's not entirely true is it.

If you were given the opportunity to take on a job, which would pay the bills but might be slightly less than what you could potentially earn now, but you know that after 3 or 4 years you'll be then able to compete for jobs paying 4x the salary, you would take it.

Basically, these CEO roles are like internships - great for the CV & great for building your network/raising your profile. Its a short term investment for a long term gain.

 

[NoRegretsCoyote]

Basically, these CEO roles are like internships - great for the CV & great for building your network/raising your profile. Its a short term investment for a long term gain.

Pre-pay cap, can you give me an example of an Irish bank CEO that moved on to a better-paying job afterward?

 

[Andy836]

Pre-pay cap, can you give me an example of an Irish bank CEO that moved on to a better-paying job afterward?

No i can't. Because they were being paid a small fortune to compete in an expanding credit market so they were being paid enough to stay.

They are not now competing in anything other than mortgages and even in that market there doesn't appear to be much competition.

I don't have a problem with the CEO's & CFO's moving on after a couple of years.

 

[NoRegretsCoyote]

Basically, these CEO roles are like internships - great for the CV & great for building your network/raising your profile. Its a short term investment for a long term gain.

Pre-pay cap, can you give me an example of an Irish bank CEO that moved on to a better-paying job afterward?

No i can't.

You claim that an Irish bank CEO is a stepping stone to a bigger job, yet can't cite any examples of where this happened before there was a pay cap.

I'm not convinced that AIB bank shareholders (ie, you and me) are best served by someone with their eye on the door.

I'm out.

 

[AlbacoreA]

...
There is no analysis here. When we blame banks, who are we talking about? We don’t mean the teller or the director of human resources or the shareholder or the depositor. In this context “banks” and “bankers” are almost meaningless terms.

Ask a vague question get a vague answer.

Banks constantly make odd business decisions.
They often choose to make life very hard for their customers which seems to give the bank a less than optimum return.
Even encouraging customers to switch banks to get a better deal.

 

[Andy836]

You claim that an Irish bank CEO is a stepping stone to a bigger job, yet can't cite any examples of where this happened before there was a pay cap.

I'm not convinced that AIB bank shareholders (ie, you and me) are best served by someone with their eye on the door.

I'm out.

You seem to have gotten this all backwards.

Pre GFC the AIB & BOI CEO roles were real leadership roles. They were tasked with expanding the balance sheets and successfully did so and picked up market rate remuneration packages - until of course when they didn't.

Post GFC these CEO positions are effectively internships as they are not really tasked with growing their balance sheets as they are not doing much if any high risk business - as there's no appetite for them to do so from their largest shareholder (the Govt/State).

As for current shareholders being better served by someone with a long term view, perhaps but I'm not convinced. As I see it investors are happy with the CEO simply being "a safe pair of hands". So it's effectively just a yield play for shareholders. There's no growth multiple attributed to AIB or BOI - they both trade at <1,0x book value.