SEPTEMBER 2013 - financial services union
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SEPTEMBER 2013
SPECTRUM september 2013 IBOA THE FINANCE UNION www.iboa.ie www.iboa.org.uk www.iboa.ie www.iboa.org.uk IBOA THE FINANCE UNION september 2013 SPECTRUM
In this issue…
Loose change 5-11
• Giving capitalism a bad name –
Inside Irish Nationwide
• Pillar talk –
Worst may be over for BoI
AIB cutting losses as well as staff and branches
• Post chatter –
Recent developments in Ulster, RBS and Danske Bank
• Lifetrials of the
Slick and Shameless
– The men and women
who end up quids in,
no matter what!
• Because they’re worth it!
– Poachers turn
gamekeepers
The Archbishop of Centerburyt see pages 13-14)
Current Accounts 12-17 • Sir Henry banks on integrity
A short story by IBOA member, David Lemon
• Banking Crisis Inquiry • The 2013 Lockout
Why it must not be led by the Oireachtas Bank branches close across the European Union
• Household debt falls
• Church Militant • Roux is new Regulator
Archbishop takes on pay-day lenders • Banks line up to sell other banks
Discount Window 18-19
Spectrum is published by IBOA – The Finance Union, • New Group Scheme for IBOA members offers massive savings
IBOA House, Stephen Street Upper, Dublin 8 on branded products and services
and 29, Malone Road, Belfast. BT9 6RU.
Telephone: 00353-1-4755908 and 0044-28-90200130
info@iboa.ie www.iboa.ie www.iboa.org.uk Going Concerns: Inside IBOA 20-23
General Secretary: Larry Broderick • Getting the most from your IBOA
Honorary Secretary: Tommy Kennedy • Pensioner members angry at broken
Communications Manager: Séamas Sheils promises
Advertising enquiries to Anna O’Doherty • Connect Up with IBOA - Summer Draw
or Louise O’Donnell in IBOA House. • The Fees Freeze
Spectrum is printed on recycled paper • Summer Fun with IBOA
and wrapped for posting in Pictures from Fota and Tayto Park
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2 3
LOOSE
Bank Notes 24-29
SPECTRUM september 2013 IBOA THE FINANCE UNION www.iboa.ie www.iboa.org.uk www.iboa.ie www.iboa.org.uk IBOA THE FINANCE UNION september 2013 SPECTRUM
CHANGE
Recent Developments in
Major Employments
• AIB workers vote on Bank’s future
finding facts
• AIB plans to advance restructure of retail network
• The recommendations from the Labour Court and the
Interest Only 30-33
independent mediator - in summary • The Story of the Dublin Lock-out of 1913-1914 Alarming rise in
• FBCs shocked at Bank’s proposal to remove cars •
•
Inspired by the Lockout: Art and Literature
A Stictch in Time: the 1913 Lockout Tapestry project
bank complaints
• Bank of Ireland stalemate on pensions
• BOI mortgage advice service •
•
Lock-out Exhibtion
Graphic novel about 1913 Lockout
Irish banks’ responses to
complaints from customers
has shown no improvement
• Use of public image limited • Unfinished business: in services for the first half
• Danske Bank: review of head office operations where is the right to union representation in the Republic? of 2013, according to the
Republic’s Financial Services
• Dansle Works Council meets
• Ulster Bank: a glitch in time! ‘Breeding Ombudsman, despite an
increase in the number of
complaints to almost 4,700
ground
• Ulster Bank branch network under review between January and June
this year – a rise of 27% on the
• IBOA challenges ‘normalisation’ in Ulster Bank same period in 2012.
Ombudsman, Bill Prasifka
• Claim for pay rise in Ulster Bank
for abuse’
(above), said that a large number
• IBRC: Wallace in Blunderland of institutions treat his office as
just another complaints department.
• IBRC: Cheque it out - liquidator foul up Adding that the same types
of complaints are recurring each
• Pay rise likely in HP Former Irish Nationwide Chief Executive, Michael Fingleton (Photo: Photocall-Ireland). year, he said this reflects badly
on the industry at a time when it
Investigation highlights major flaws at Irish Nationwide needs to work with its customers.
Recent legislative changes
mean that the Ombudsman will be
T he corporate structure at Irish
Nationwide was “hideously
flawed” and created a “breeding
allowed to “participate personally in
commercial transactions to a degree
which was at best commercially
His report has also highlighted
the ineffectual role of the Irish State
which allowed Mr Fingleton to
able to publish complaint records
of individual financial institutions
in future reviews.
ground for an abuse of power improper, and at worst illegal.” engage in reckless behaviour with
which occurred”, according to a Dobbie added that the society’s impunity for many years.
special investigation which was flawed corporate structure con-
Foreign Exchange
“The Financial Regulator, from
34-35 Fixed Interest 38-46 highlighted in a recent edition of
the Sunday Independent news-
centrated too much power in the
hands of one individual, Michael
the documentation I have seen,
appears to have understood and
• All-women bank for India paper.
Last year’s investigation by
Fingleton – the Chief Executive.
“The concentration and abuse
delineated the critical INBS issues
• End no women boards – EU • The Doll’s House: New thriller from Louise Phillips Scott Dobbie, a former director of power must have been obvious
well before they caused trouble, but
equally failed fully to use its powers
• Bridge the Gap • Sisters sublime: Webbs wonderful of the UK Securities and Futures
Authority and a senior adviser to
to the board — or if not it is a sign
of greater incompetence — and one
under the (Building Societies) Act by
pursuing these issues, being appar-
Global campaign on safety
• Howard’s Way: Racing movie with real drama Deustche Bank, concluded that is frankly surprised that anyone ently mollified by bland assurances
there was a “strong indication” that mindful of personal reputation did from the INBS Chairman and CEO.”
• New regime to operate LIBOR • About Time Gleeson gets starring role Irish Nationwide’s officers were not seek either profound change or
Post mortem into
Mr Dobbie believed that the
resignation,” said Dobbie.
• UK banks cut jobs worldwide • Prize Crossword, The investigation also found
Financial Regulator, even by the
standards of the early 2000s “did
Picture Board & Sudoku
• George Hamilton
that the society’s approach to lending
to politicians was “seriously flawed.”
Irish Nationwide lent to “politically
not meet standards which might be
reasonably expected.” Co-op deficit
“The activities of the CEO and
T
exposed persons” (politicians and he Co-operative Group in
some of his close colleagues exhibit
• Stephen Malone their relatives) without applying
to my mind malfeasance and a the UK is to conduct a
“rules or good practice in handling
Life Cover 36-37 personal and business conflicts,” he
said.
general abuse of trust,” he declared.
The behaviour of Mr Fingleton,
he said, was “much worse” than any-
major inquiry into how its
banking arm ended up with
a £1.5bn hole in its balance
• Skin and groans thing he had witnessed in ten years sheet.
• Worked to death The behaviour of as a member of the Enforcement This follows its disastrous take-
Michael Fingleton Committee of the Securities and over of the Britannia Building
Investment bank intern dies in London Futures Authority, of the Regulatory Society and its failed attempt to
was “much worse” Decisions Committee of the Financial acquire over 600 branches from
• Workplace stress is bad for your physical health Former INBS Chairman, Michael
than anything he Services Authority and of the Jersey Lloyds Banking Group.
Walsh (Photo: Photocall-Ireland). Financial Services Commmission. Meanwhile the Co-op plans to
had ever witnessed plug the hole by forcing bond
4 in ten years in investors to take a hit on their
investment. 5
regulatory roles.
LOOSE
CHANGE SPECTRUM september 2013 IBOA THE FINANCE UNION www.iboa.ie www.iboa.org.uk www.iboa.ie www.iboa.org.uk IBOA THE FINANCE UNION september 2013 SPECTRUM
Switch on in
September
pillar talk A new system designed to
make it easier and quicker for
Worst is over, says BoI
bank customers in the UK to
New Ireland switch their current account
from one bank to another is
is a keeper due to launch in September.
B ank of Ireland has said the
worst is now behind it and
it is close to profitability. B ank of Ireland has secured
EU approval to retain its New
33 banks and building
societies – accounting for
virtually 100% of the current
Reporting total losses before Ireland Assurance subsidiary. But account marketplace – have
tax of €504m for the first six months under a new restructuring plan signed up to the Current
of 2013 – compared to losses of agreed with the European Com- Account Switch Guarantee.
€1.26bn for the same period last mission, other units will have to be The free service will
year – the Bank said that impair- sold instead. ensure that switches will be
ment charges on loans to customers As a result, the Bank plans to
completed in seven working
fell by 17% from €941m in June exit its UK corporate and business
2012 to €780m at the end of June banking operations which, it has days – rather than the current
this year – while its total income in described as mainly “niche” activities. norm of between 18 and 30
the first half of 2013 rose by 36% to The move does not affect the days.
€1.188bn. Bank of Ireland’s consumer banking Customers will be able to
With provisions for impaired businesses in the UK (including its choose the exact date of the
loans falling, growth in mortgage partnership with the Post Office), or move when all outgoing and
arrears slowing and its deposit its businesses in Northern Ireland. incoming payments – such
base stable, Chief Executive, Richie as direct debits and salaries –
Boucher, said the Bank was on the will be redirected to the new
AIB continues to cut losses
mend. bank account.
“It’s been a hard four years,”
he said. “But we now have a nor- Disposals
malised bank which has strong
(along with jobs and branches)
The European Commission had
momentum towards profitability. originally ordered the Bank to sell
We are in the more pleasant place New Ireland two years ago as one of
of having the challenges of ordinary
A
a number of operational changes –
businessmen and women.” including job reductions and other
IB made a loss of €758m AIB’s loan-to-deposit ratio employees left the State-owned
Underlying operating profits business disposals – which were to for the first half of 2013, is now 106%, which is down Bank – with the result that staff
– before impairment provisions be implemented in return for re- after provisions for impaired from 115% at the end of 2012. costs fell by 16% on the year.
– rose to €380m in the first six ceiving State aid. loans – compared with €1,054m This is a marked improve- Meanwhile overall operating
months of the year, up €343m on “In the light of various changes for the same period in 2012. ment on the unsustainable expenses – including exceptional
the same time last year. in the market circumstances Operating profits before loan-to-deposit ratio of just items – were down by 14%
“Our expectation continues Bank of Ireland Chief Executive Richie Boucher since the 2011 decision,” said the provisions for bad loans came to over the same twelve-month
under 180% at the start of the
to be that impairment charges will Commission, “Bank of Ireland is
reduce from the current elevated Staff costs fell by €37m to €351m. Underlying profit for the Retail
€162m for the first six months crisis in 2008. period.
no longer required to divest New of 2013 – compared to a €110m Aside from cutting costs
level, trending over time to a more Bank of Ireland reported an UK division in the first half of 2013 Ireland Assurance Company.
normalised impairment charge, as underlying operating profit – before jumped to €77m compared with loss for the same period in 2012. Reduced staffing levels by reducing staff numbers and
“Such a divestment would
the Irish economy recovers,” said impairment charges – for the first six €2m for the same period in 2012, negatively affect Bank of Ireland’s Customer deposits rose Over the twelve months to closing branches, AIB has also Lord Mervyn King
Boucher. months of the year of €159m for its while profits at the Corporate and capital and capacity to return by €1.2bn in the first half of the end of June, around 2,300 sought to drive revenues by re-
Average staff numbers at the
bank fell to 11,998 at the end of
Retail Ireland division, while oper-
ating profits for Bank of Ireland Life
Treasury division rose to €305m for
the first half of 2013 compared with
to profitability and would slow
down progress towards long-term
2013 while funding from the
European Central Bank and the For workplace news about
pricing many existing financial
products to customers as well as Bank honours its
June from 13,429 in June 2012. reached €40m in the same period. €243m in the same period in 2012. viability.” Irish Central Bank fell by 20% to
€18bn over the same period.
AIB Group, see page XX. introducing additional charges
for other services. ex-Governor King
Unsatisfactory
Bank of Ireland had a con- The Bank of England spent over
Big boost to
sumer satisfaction rating of just
41% – compared to an average Duffy’s defaulter After Duffy’s speculation that
one in five mortgage defaulters
£26,000 on presents and going
away parties for its recently
SME lending
rating of 62% for all 21 banks.
Unpopular in the UK after speculation stirs in Ireland were simply refusing
to pay – as opposed to being
retired Governor, Mervyn King.
Lord King received a £10,000
BoI and Ulster fall well short among recent increases in its tracker
up media circus unable to pay – the usually cau- copy of a specially commis-
sioned portrait of himself, along
B ank of Ireland has reported interest rates, Bank of Ireland tious SIPTU President went over
UK banks in customer survey also scored badly on customer the top by comparing the AIB with a £2,500 bust of the German
T
an 18% rise in loan approvals he graphic language used writer, Goethe, and a £600 silver
service, clarity of statements, fre- chief with Nazi propagandists.
for small and medium-sized by SIPTU President, Jack napkin ring.
quency of communications and The media in turn castigated
enterprises (SMEs) for the first
half of 2013 – compared to the
same period in 2012.
B ank of Ireland and Ulster
Bank were rated worst of
21 retail banks operating in
Bank of Ireland came last
in the poll with Ulster Bank
second last.
branch availability.
Ulster Bank scored a rating
O’Connor – in response to com-
ments by AIB Group Chief
Executive, David Duffy, on the
O’Connor on his language.
This was an unfortunate
The Bank also spent over
£13,000 on retirement parties,
including £1,500 on flowers and
of 45% – suffering a backlash for distraction from the substan-
Loans worth €1.9bn were the UK in a recent customer motives of mortgage defaulters – invitations.
the computer breakdowns last tive point that David Duffy’s The cost of the Bank’s tribute
approved during the first half of satisfaction survey, conducted For workplace news about summer and this March. Ulster’s quite predictably generated a great remarks are, as yet, without
the year. to its former Governor came to
by the consumer magazine, Bank of Ireland, see page 26. parent, RBS, also fared badly, deal of media heat but sadly very foundation – since there is no light after a freedom of informa-
Director of Business Banking, Which? coming fifth last. David Duffy: speculation little light. objective data to support them. tion request from the MSN UK
Mark Cunningham, said the bank news organisation.
6
is providing almost 50% of all
non-property lending to SMEs 7
in Ireland.
LOOSE
CHANGE SPECTRUM september 2013 IBOA THE FINANCE UNION www.iboa.ie www.iboa.org.uk www.iboa.ie www.iboa.org.uk IBOA THE FINANCE UNION september 2013 SPECTRUM
post chatter
Ross is new
boss at RBS
U lster Bank parent, RBS,
has confirmed that New
Zealander, Ross McEwan, Danske Chief Executive
is to succeed current Chief Eivind Kolding,
Executive, Stephen Hester, in
Profits rise
October.
McEwan’s elevation to the top
post in RBS comes less than a year
after his appointment as Head of New RBS Chief Executive,
UK Retail in RBS. He joined RBS
in 2012 from Commonwealth Bank
of Australia where he was Group
Ross McEwan
He had been widely tipped for
the impending vacancy at the top
at Danske
parent
Executive for Retail Banking for five
of the 81% State-owned banking
years. Before that, he was Executive
group after his predecessor Stephen
General Manager in charge of its
Hester was effectively ousted by the
Danske about to return to
branch network, contact centres
British Government in June.
and third party mortgage brokers. McEwan’s main task will be to
McEwan had worked in the complete the restructuring of RBS
insurance and investment sectors Denmark’s biggest bank,
profit in Northern Ireland
with a view to facilitating its return
in both Australia and New Zealand to the private sector. Danske Bank – which has
for over 25 years. A Bachelor of two banking operations in
Ulster Bank Chief Executive Jim Brown
Business Studies, McEwan enjoys Ireland, north and south – has
(Photo Mark Stedman/Photocall Ireland) For workplace news about
water skiing, cycling, reading and reported a 46% increase in
Outlook on impaired
Ulster Bank, see page 28
D
spending time with his family. He is
anske Bank in Northern a pre-tax profit of £27m was reduced Financial performance profits in the second quarter
married with two children.
Ireland appears to be on the to the £1m loss by impairment significantly improved of 2013 – its highest in five
verge of returning to profit this charges totalling £28m. “Year on year, it’s down by 70%. So
loans improves at
years – after loan losses fell
Good news – bad news for year with its recent loss of £1m for
the first half of 2013.
This figure compares well with
“The amount of impairment
charges – which is bad debt provision
– has actually decreased massively,”
things are trending very strongly in
the right direction.”
“Whilst remaining cautious
on improving economic con-
ditions in its main markets.
Ulster Bank Ulster Bank customers the £25m loss reported for the first
half of 2012.
said the Chief Executive Officer,
Gerry Mallon.
on the outlook for 2013, the bank
is happy to report a significantly
The bank said net income
rose to 2.18bn kroner (€292m)
T
While the bank’s main business improved financial performance for beating expectations, after loan
L osses at Ulster Bank fell in the first half of 2013 while operating profits here were mixed blessings for Ulster Bank customers recently.
is operating in profit, it still had to the year to date including a pre-tax losses fell 45% to 924m kroner
before impairments increased. Impairments fell to £503m (€591m) in Soon after becoming the first major Irish bank to offer foreign write off a significant amount of bad For workplace news about profit in the second quarter to the (€124m).
the first six months of this year, down from £717m in the same period in exchange services to all of its customers free of transaction charges, debt – arising mainly from impaired Danske Bank, see page 27. end of June,” said the Bank’s com-
Ulster Bank announced that it intends to introduce fees on some Danske said that quarterly
2012. property loans – with the result that mentary on its results.
Operating losses eased to £329m in the first half of 2013 from £555m in personal current accounts with overdraft facilities. loan losses had now declined
2012. When impairments are subtracted, Ulster Bank recorded an operating Transaction charge-free foreign exchange services are available through to their lowest level since the
second quarter of 2008.
Bigger quarterly losses
profit of £174m. all electronic channels – including branches with electronic payment facilities
The bank also noted that the as well as the Bank’s Anytime and Danica Pension, Danske’s
number of customers in mortgage Bankline services. pension and life insurance unit,
at Danske Ireland
arrears for 90 days or over fell in reported a loss of 346m kroner
Ulster’s farewell to Sam?
The removal of forex charges
the second quarter compared to the has been welcomed by customers. (€46m) – its first since the third
first three months of the year – the The bank had previously charged quarter of 2011.
D
first quarter-on-quarter fall since personal customers between €12.70
June 2008. Ulster Bank’s six-year sponsorship of the GAA’s All-Ireland Gaelic anske Bank’s Republic of Total income for the three Speaking to reporters after
to €44.44, depending on the amount Ireland operation reported month period came to €15.7m, up presenting the bank’s earn-
“We continue to see large Football championships is expected to conclude at the end of this
– while business customers paid bigger quarterly losses before from €14.6m in the previous three ings, Danske Chief Executive,
numbers of customers who are not year.
from €9.52 to €33.33 for the service. month period. Eivind Kolding, ruled out talk
engaging with us,” said Ulster Bank The Bank has been one of three co- tax recently as a result of higher
Meanwhile new fees for some Head of Danske Bank Ireland, of a sale of Danica.
Chief Executive, Jim Brown. sponsors of the football championships impairment charges.
“Our core objective remains to since 2008 originally with Vodafone personal current accounts with Terry Browne, noted that mortgage
Losses before tax rose to Danske has not paid a
keep as many co-operating customers and Toyota and more recently with overdraft facilities will apply from €17.4m for the second quarter of arrears at the bank have remained
16 September – with customers
dividend to its shareholders
in their homes as possible and we SuperValu and Eircom. 2013 compared with €8.8m in the comparatively low at 4.25% – as
incurring a €25 overdraft set-up fee since 2007 – a trend the bank
encourage customers in financial If Ulster Bank departs, it will mean first quarter. against an average for the sector of
difficulty to engage with us to find that, for the first time in 20 years, no bank and a €25 annual overdraft fee. The 12.3%. says it will reverse once reserves
The bank also reported in-
the right solution,” he added. will be involved in sponsoring the senior fees will apply to newly arranged creased impairment charges of Customer deposits rose by 8% are big enough.
“We expect to see an increase county championship. Before Ulster Bank’s overdrafts, increases in overdraft €15.4m for the second quarter of in the second quarter to €3.4bn, Its Chief Financial Officer,
in legal activity where the customer tenure, Bank of Ireland was the major limits and accounts that already Head of Danske Bank Ireland, the year compared with €5.5m in while costs were down by 1% com- Henrik Ramlau-Hansen, has
still does not engage,” he warned. sponsor of the All-Ireland series. have overdraft facilities. Terry Browne the first quarter. pared to the first quarter. said that the bank plans to pay
Meanwhile AIB looks set to more years – while long-time a dividend for 2013 if it meets
8 continue its 22-year-long relation-
ship with the All-Ireland Club
National League sponsor, Allianz,
will continue until 2015 at
its targeted results.
9
Championship for at least four least.
LOOSE LOOSE
CHANGE SPECTRUM september 2013 IBOA THE FINANCE UNION www.iboa.ie www.iboa.org.uk www.iboa.ie www.iboa.org.uk IBOA THE FINANCE UNION september 2013 SPECTRUM
CHANGE
lifetrials of the
slick & shameless because they’re worth it!
Gamekeepers
European Union
and Norway
turned
3
1.1
poachers?
T
KEY hree prominent regulators
19 Total number of have recently declared
1.1 15 NA bankers earning their intentions to “go over
1.5 NA €1m and over to the dark side” by accepting
NA in 2011 senior positions in two of the Sir Hector Sants Catherine Brown
NA UK’s major banks.
33 Average total an interest in Ireland through Bank the Bank of England to become
1.5 NA remuneration The Deputy Governor of
of Scotland Ireland whose loan Lloyds’ Group Strategy Director.
NA for “millionaire the Irish Central Bank, Matthew
Lloyd Blankfein, Chief Executive of Goldman Sachs 21 book is being worked out through Meanwhile Sir Hector Sants,
bankers” in 2011 Elderfield, whose principal area of
1.4 by Certus. the former Chief Executive of the
Lloyd’s blank fine
in millions of euro responsibility has been financial
36 4 regulation, is leaving Dublin in While there has been no con- UK’s recently disbanded banking
2436
1.4 1.5 1.5 firmation of Elderfield’s reward in regulator – the Financial Services
October after three years to return
170 to London as the new Director of his new role, he achieved the dis- Authority – joined Barclays Bank
8
G oldman Sachs chief, Lloyd Bloomberg Markets magazine 1.4 1.8 Conduct and Compliance at Lloyds tinction of being the highest paid earlier this year as its new Head of
NA employee in the Irish Central Bank Compliance and Government and
Blankfein is the best-paid which analysed rewards in the NA Banking Group.
2 Though Halifax’s ill-fated Irish on the princely sum of €340,000 Regulatory Relations.
bank CEO in North America, twenty biggest North American 1.8 a year – earning €127,000 more As if to confirm his complete
according to a recent issue of banks. 10 venture was laid to rest as HBOS
10 162 8 than his boss – the Governor, assimiliation to the ranks of the
Blankfein made $26m last 1.7 1.6 1.8 was being rescued by Lloyds on
1.5 NA the orders of the previous British Patrick Honohan – who has taken a “poachers,” Sants was recently
year – a 73% increase on the NA NA voluntary pay cut of €63,324. appointed as one of Barclays’
previous year. However, he is NA Government, Lloyds has retained
Elderfield will be joined at representatives on the board of
not the “most overpaid” CEO, Lloyds by Catherine Brown, who British banking’s main sectoral
according to Bloomberg Markets. 96 NA recently resigned as Executive lobbying group – the British Bankers’
He was edged out of the top spot 1.6 NA Director for Human Resources at Association.
by Richard Fairbank of Capital
One Financial, who was paid 125
11
$17.5m last year as head of a
bank with a considerably poorer
1.6
2.4
2 Average pay
2.0
performance.
Bloomberg Markets judges
$117,000 for
how over- or under-paid bank
chiefs are by comparing their NA
4
1.6 three months
position on the pay list to NA
at Goldman
If the cap fits… their ranking in returns and
P
Euro-million(aire)s
profitability. Matthew Elderfield Goldman CEO, Lloyd Blankfein ay at global bank, Goldman
As well as a fixed annual salary of Sachs, rose by 27% for the
£800,000, Barclays’ new finance second quarter of this year –
director, Tushar Morzaria (above),
is also eligible for a bonus of 250%
of salary – £2m – as well as annual
New ‘cheap’ which means that each of the
company’s 31,700 employees
earned an average of $117,000
share awards worth up to 400% of
salary – £3.2m – under a long-term
M ore bankers in Britain
earned annual basic pay of
€1m or over in 2011 than in the
360 in other business areas, said the
EBA report.
Ireland had 21 in total – 14 of
euro earning bankers, while Poland
had only four.
The highest paid senior bankers
executive (£77,200) in the three-month
period.
The increase followed a dou-
officer for RBS
incentive plan.
rest of the European Union com- whom were working in investment in the EU in 2011 were found in Spain bling of the bank’s second quarter
Barclays has also said it will
banking with 3 in asset management where fixed pay averaged €2.44m. profits compared with the same
provide a further share package to bined, according to recent figures and none in retail banking.
match any deferred or long-term The EBA has made proposals for period last year – with net income
from the European Banking Only 170 bankers based in an annual cap on fixed pay of €500,000 New RBS Chief Executive, rising to $1.93bn (£1.28bn) for the
awards he may have lost by leaving
Authority (EBA). Germany hit the €1m mark in 2011 and for annual bonuses to be generally Ross McEwan, will be paid second quarter of 2013 compared
his former employer, J. P. Morgan.
A total of 2,436 UK-based bankers compared to 162 in France, 125 in capped at an amount equal to annual to $962m a year earlier.
How all this will square with a salary of £1m a year – a
the new EU cap on banker bonuses exceeded the €1m mark for annual Spain, 96 in Italy, 36 in the Netherlands fixed pay – or, if shareholders approve, With its share price up nearly
16.7% cut from the £1.2m
remains to be seen. The EU has fixed pay. Of these, 1,809 were working and only 14 in Sweden. up to twice the amount of fixed pay. or for 2014 from the mainly 30% since the start of 2013, the
in investment banking, 85 in retail
paid to his predecessor, State-owned lender. Bank allocated $3.7bn in the second
agreed to limit fixed pay for high Some countries, such as the Czech The cap will apply to awards for per-
Richard Fairbank of Capital banking, 182 in asset management and Republic and Estonia, had no million formance in 2014 and onwards. Stephen Hester. As one of McEwan’s key tasks quarter for pay – an increase of 27%
earning bankers to €500,000 with
their bonuses to be set at 100% One Financial At the press conference to will be to prepare the bank for a over the same period in 2012.
of annual fixed pay unless share- announce his appointment, return to the private sector, his
10
holders specifically approve a higher
limit of 200%.
McEwan said he did not want
to be considered for an annual
self-sacrifice in the short term
may be calculated to achieve a 11
bonus for the remainder of 2013 bigger reward in the long term.
CURRENT CURRENT
ACCOUNTS SPECTRUM september 2013 IBOA THE FINANCE UNION www.iboa.ie www.iboa.org.uk www.iboa.ie www.iboa.org.uk IBOA THE FINANCE UNION september 2013 SPECTRUM
ACCOUNTS
Banking crisis inquiry
Too important to be political football
T he recent revelations that the Republic’s junior
Minister for Small Business, John Perry, had not
Above: Despite a
temporarycessation
personal gain, however modest, would be irresistible. Perry
aside, the recent history of relations between politicians and
Church Militant
only got into financial difficulty but had “dropped the of hostilities during financial institutions has been fraught with difficulty.
names” of Bank of Ireland CEO, Richie Boucher, and the Christmas period, The political history of the Republic is littered with
the political parties examples of State-owned enterprises being exploited for party
AIB CEO, David Duffy, into discussions with Danske
in Dáil Éireann are political gain. Not only was it tolerated: it was expected by the
Bank about his own personal finances raise a number supporters of any party exercising power at local, regional or
likely to treat an
of issues beyond the obvious concern over the pro-
Archbishop takes on pay-day lenders
Oireachtas-led national level.
priety of a Minister making use of contacts made in the banking inquiry as And of course financial institutions have also engaged
course of his public duties in an apparent bid to further another chance to directly and personally with politicians in an unseemly fashion
his own personal interests. try to score points – not just “maverick” chief executives like Michael Fingleton
Firstly it provides a further argument for the need for against their rivals. (see page 5) – but also pillars of the financial establishment who
an independent – as opposed to a Parliamentary – inquiry
into the banking crisis. So many politicians come with some
pre-existing baggage based on their personal histories with
(Photo: Mark Sted-
man/Photocall
Ireland).
have been prepared to write off debts owed by politicians – on
the basis, no doubt, of some sound commercial reasons but
leaving the whiff of suspicion, nevertheless.
B ritain’s Archbishop of Canterbury, Justin Welby,
has vowed to put payday lenders out of business by
using the Church of England to support the country’s
Above: Archbishop
of Canterbury,
Justin Welby
The Archbishop added: “We’ve got to have credit unions
that are both engaged in their communities and much more
professional, and the third thing is people have got to know
these institutions as to raise questions about their impartiality. Perhaps, Irish society is just too closed to establish the (Image: London about them. It’s a decade-long process.”
network of credit unions. Evening Standard)
When you factor in the general lack of supervision by the necessary arm’s length relationship between individual rep- However, one of the first steps to be taken by the
In a recent face-to-face meeting with Errol Damelin, the
political establishment – who were not only responsible for resentatives of the State (like Government Ministers) and the Archbishop, who is a former oil industry executive and a
founder and chief executive of Wonga, the Archbishop outlined
creating a deficient regulatory structure but whose policies financial institutions they are required to regulate. member of the Parliamentary Commission on Banking
his ambition to make the controversial lenders redundant – by
also fuelled the property bubble – then an open and thorough Another aspect of the recent revelations relates to the issue Standards, was to respond to the subsequent revelation that
investigation becomes even less likely. supporting the UK’s extensive network of around 500 credit the Church of England was indirectly investing pension funds
of fitness and probity. Of course, it is not our place to pre-judge
It is also inconceivable in the present climate of political the Minister’s conduct of his financial affairs. unions to play an enhanced role in assisting people experi- in Wonga through its holdings in Accel Partners, a US venture
discourse in the Republic that the players in the Dáil could Certainly he is not alone in accumulating substantial debts encing financial difficulties. capital firm which fundraised for Wonga in 2009.
resist the opportunity to score party political points over their in recent times – and many of his colleagues in Government The Church of England – which already operates a credit Since the advent of austerity, payday lenders have come
opponents in an Oireachtas-led inquiry. Indeed even before have rallied to his defence arguing that his actions should not union for its own staff – aims to provide advice to other credit under intense scrutiny because of their perceived role in
the terms of reference for the inquiry have been finalised, the cost him his job either as a Deputy or a Minister. unions on extending their presence in local communities. With exploiting the serious debt problems being experiencing by
sparring has begun – because of course, these terms will largely However, it is worth remembering that, as our members 16,000 ‘sites’ in 9,000 communities, the Church of England’s so many people. Their massive interest rates, excessivecharges,
determine the scope and nature of the inquiry, itself. Above: Lord Justice know only too well, if a bank worker was in similar financial own network is larger than that of the main retail banks. So the irresponsible lending and misleading advertising have
An Oireachtas-led inquiry will undoubtedly generate Brian Leveson. IBOA circumstances to the Minister, she or he would probably be Archbishop plans to allow credit unions to use Church prem- encouraged many of those who can least afford it to become
much heat and some degree of amusement (if you happen favours a Leveson- facing an investigation by the employer under Fitness and ises (including its schools) and to encourage members of the even more mired in spiralling debt.
to like pantomimes). But, precious little light may be shone style inquiry into Probity regulations with the real prospect of losing his/her job. Church with the appropriate skills to partcipate in credit unions A recent survey by the UK consumer organisation, Which?,
on the factors that combined to create the crisis and, more the Irish banking That is not to say that the Minister should automatically as volunteers. found that 4% of people – equivalent to one million households
importantly, the lessons to be learnt to prevent a repetition in crisis (Photo: PA). lose his job – but rather that more sympathetic consideration In a recent interview with Total Politics magazine, the – in the UK are forced to avail of payday loans every month in
the future. should be given to the plight of bank workers – many of whom Archbishop said: “I’ve met the head of Wonga and we had a The suggestion order to meet the rising cost of living.
Perry’s perilous position also underlines why in Ireland the were actively encouraged by their employer to increase their very good conversation and I said to him quite bluntly ‘we’re that further Some 38% of those who take out payday loans – equi-
nationalisation of the banking sector – other than as an emer- borrowings during the boom and who now, like the Minister, not in the business of trying to legislate you out of existence, cuts are valent to 400,000 households – use the loans to pay for essentials
gency measure – is likely to be fraught with difficulty because are facing difficult financial circumstances which certainly we’re trying to compete you out of existence.’ He’s a busi- like food and fuel, while 24% (or 240,000 households) need
required in
for many politicians the temptation to use the relationship for would not be resolved if they were to lose their jobs. nessman, he took that well.” bank workers’ Ú
pay is
12 outrageous.
13
Larry Broderick
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Wonga Chief Executive, Errol
Damelin (left) and Dr. Justin
Welby, Archbishop of Canter-
bury (right).
Below: a spoof advertisement
Sentamu
for wonga.com
to head the money to pay off other borrow-
ings. 49% of the people who take out
Seven in ten of payday loan users
regret taking out credit in the past,
the regulator must back this up by
enforcing proper affordability checks
low pay payday loans (equivalent to just under
half a million households) report that
they can’t cover the cost of repayments
while 28% said that, while they don’t
like being in debt, they saw it as a nec-
essary part of their life.
and punishing lenders who flout the
rules. We also want more action from
the Government to tackle this toxic
body – which in some cases attract interest
rates of over 5,000% – which results in
an ever-spiraling debt problem.
Richard Lloyd of Which?, said:
“Payday lending is dogged by poor
practice yet people are increasingly
market.”
Another UK consumer rights
body, Citizens Advice, found that
W hile the Archbishop
of Canterbury takes
on the payday lenders,
The survey also found that 38.5
million adults in Britain, use some
form of credit, while 44% of the
turning to this very high cost credit
to cover essentials or pay off existing
debts.
in 76% of cases it examined, bor-
rowers were found to have grounds
to take a complaint to the Financial
population are worried about their “A clear message has been sent Ombudsman Service – while one in
his clerical colleague, the household level of debt. to lenders to clean up their act, but five of these cases possibly involved
Anglican Archbishop of fraud, with people being chased
York, John Sentamu, is to for loans they never took out.
Sir Henry banks on integrity
chair a year-long inquiry Over a third of the cases
into low pay in the UK. saw lenders using a continuous
In an outspoken article in payment authority – a recurring
a recent issue of the Observer payment mechanism which
newspaper, the Archbishop enables the loan company to
described the prevalence drain customers’ bank accounts.
of low pay as a “national Growing concerns about Stephen Gibson was the Head of Sales at Financial going to be able to buy it if sales are only up
scandal” – warning that busi- payday lenders targeting vulner- Integrity Bank (FIB), having been headhunted A short story by IBOA by 45%. Should such an unwelcome outcome
nesses have a moral duty to able people forced Britain’s Office from the Big Crumbly Biscuit Company, since member, David Lemon eventuate, Lady Platinum would make my life
ensure that all employees of Fair Trading to refer the sector none of FIB’s 10,000 employees were deemed up hell. You can see my predicament?”
receive a living wage. to the Competition Commission to the job. “I can indeed, sir,” responded Gibson, who
“Women, as the majority earlier this year. “But you asked to see me, sir,” stammered
He had transferred across a year earlier and Stephen. to give him his due, could also see that in such
of low-paid workers in this Since the Competition Com- in the intervening period learned everything circumstances the hellish life would be recipro-
country, are hit particularly mission’s investigation into the “Of course, but I’m not talking to you,”
there was to know about banking. Now he had explained Sir Henry. cated in his direction. And he was keenly aware
hard,” he wrote. “Low pay biggest fifty payday lenders been summoned to a meeting with the bank’s of the dangers of being on the wrong side of a
began, nineteen have closed down. “I don’t understand sir.”
threatens the great strides autocratic Chief Executive, Sir Henry Platinum. vengeful megalomaniac with a penchant for
While this may sound “I’m talking to you – but I’m not talking to
that have been made in He walked briskly along the corridor towards restructuring the business.
like an impressive hit rate, the you,” elaborated Sir Henry.
gender equality in recent Sir Henry’s office, the spring in his step aided by “And your plan for addressing this problem
Commission concedes that just “Oh, I see sir. You mean that the meeting
decades, because it under- the luxurious deep pile carpet and the knowledge would be what exactly?,” quizzed Sir Henry,
three companies – Wonga, Cash that we are about to have never took place,” said
mines women’s economic that sales were up 45% on the previous year. in keeping with his policy of ensuring that his
America (owner of Pounds to Stephen with a proud smile, as the penny finally
independence. This is a huge On reaching the hallowed chamber he senior managers had to think on their feet while
Pocket and QuickQuid), and dropped.
loss for them and for society paused briefly to take a deep breath before “Top of the class, Gibson. Now, down to the monkey was being placed on their back.
as a whole.” Dollar Financial Corp (owner giving the door his customary three knocks. All “I’ll crack the whip, sir. Get the folks in the
of The Money Shop and Pay- business. I’m very worried about your perfor-
Sentamu also condemns members of the senior management team were mance, Gibson. Sales are only up 45% on last year Branch network to go the extra mile,” replied
successive UK governments dayUK) – account for about allocated a knocking pattern, commensurate Stephen, failing miserably to shift the monkey.
70% of the market by turnover and your performance affects my bonus. You do
for standing by as company with their standing, and also to ensure that Sir know that Lady Platinum has her heart set on “Branch network? Do we still have one of
bosses have taken huge – turnover which has undergone Henry Platinum always knew who was calling. those, Gibson?”
a fourfold rise between 2009-10 Lady Ghislaine?”
profits and pay awards for Stephen considered himself lucky – the Head of “I’m sorry to hear that sir. I didn’t know she “Well it’s probably more of a twig network
themselves while refusing and 2011-12. Risk had to knock to the tune of Two Little Boys. now sir,” he joked weakly, “but the staff do work
From April next year the was that way inclined.”
to reward their employees “You are a complete oaf, Gibson. Lady very hard.”
fairly – arguing that both in Financial Conduct Authority – “You asked to see me sir.” Unlike some other Sir Henry, who rarely laughed at someone
the new regulator which recently Ghislaine is a yacht in Monaco. And I’m hardly
terms of both morality and financial institutions Sir Henry had no time for else’s jokes, rested his elbows on his kidney
replaced the UK’s Financial pally first names and besides he liked to be re- shaped walnut desk and peered over his platinum
economics it is wrong for
Services Authority – will be minded often of his stature as a Knight of the rimmed spectacles.
government to give tacit Any resemblance to any
empowered to impose fines on Realm. “Really?” he enquired, before adding, “I’m
approval to an approach persons – living or dead –
firms and order compensation to “I’m not talking to you, Gibson,” came the sure they all work their socks off. But that’s not
that lands the State with a is entirely deliberate!
be paid to customers. gruff reply.
huge outlay to top up the Ú
incomes of low earners.
“Why don’t those who
14
profit from these workers pay 15
up?” he asked.
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key trends Household debt falls
I rish households are continuing to
get out of debt, according to recent
figures from Ireland’s Central Bank.
Total household debt now stands
at €172.3bn (or an average of €37,500
per person) – the lowest level since
the end of 2006. The figure reflects a
fall of €1.6bn (or 1%) during the first
quarter of 2013.
The drop is largely attributable to
a fall in new loans to householders,
while at the same time older loans
are gradually being paid off.
enough. However, luckily for you I have the indeed learned everything about banking during “It’s the sort of thing parents might get their
solution.” his short tenure. kids for Christmas or birthdays, you know. So
Stephen looked intrigued as Sir Henry went “That’s horsemeat, Gibson. I sometimes just to be clear, what is it you are going to do?”
on to explain his idea for a new product for the wonder why I put you in charge of Customer asked Sir Henry, while surreptitiously pressing
youth market, the Teenage Funeral Plan. Fleecing Operations. What would the Food the record button on his secret tape machine.
“Basically it’s an insurance policy that pro- Standards Agency want with us, anyway?” “Sir, I’m going to develop a funeral plan,
vides teenagers with the peace of mind from replied Sir Henry with some exasperation. aimed at the youth market. It’ll be pretty expen-
knowing that the cost of their funerals is covered. “Not that FSA sir. The other FSA – the sive for customers and the terms and conditions
“Of course, we’d need to put a caveat on it as Financial Services Authority,” explained Gibson. will be such that it is unlikely that we’ll ever have Cyril Roux
2013 Lockout
they are all going to die sometime and we don’t “Are they not wound up, Gibson?” to pay out on a claim,” said Stephen meekly.
want to be left with an horrendous bill.
“So I was thinking about a forty-year term,
that’s pretty generous Gibson, isn’t it?” outlined
“Well they’re always wound up about stuff
like this, sir.”
“Not that wound up, Gibson. The other
Sir Henry pressed the stop button on the
recorder and said: “Excellent, Gibson. Come
back and see me in a week with the full product
Roux is new regulator
Sir Henry. wound up, as in liquidated.”
“Oh, I see sir. Yes, of course, you are right
material, launch plans and suchlike.”
T he Central Bank in the Republic
has appointed Cyril Roux, as the
country’s new financial regulator
“But sir, based on the average life span that would but they’re being replaced by the Prudential After Stephen had left, Sir Henry picked up the
mean that the policies would expire well ahead of
the time that most claims would be expected to
Regulation Authority, the PRA.”
“Next you’ll be telling me we’re going to get
phone to call Lady Platinum to tell her of the
developments.
Bank branches continue to close in EU from October 1 when Matthew
Elderfield takes up a new role for
Lloyds Banking Group in London.
arise?” queried Stephen. the Continuity Regulation Authority or the Real “Hello darling, great news, I can put the
Roux has been the first Deputy
A
“I know, Brilliant, isn’t it?” said Sir Henry Regulation Authority. Don’t worry about these deposit on that little lady in Monaco.”
with a beaming smile. splinter groups. Just get on with it. Talk to the Just then he heard a knock at his door, his bout 5,500 bank branches virtually unchanged at 11,870, The blight on the streetscapes Secretary General of the French
“But sir after the mis-selling of endowment boys in marketing and get them to develop some ears quickly picking up on the jaunty rhythm of (or 2.5% of the total) according to the ECB – while of towns and cities in Northern prudential supervisory authority for
mortgages, and PPI, interest rate hedging products fancy wording and then get the legal team to Joe Dolce’s Shaddap You Face. closed across the European branch numbers increased in Ireland – caused by the growing banks and insurance companies (ACPR)
and the like, the FSA would be all over us,” draft the usual get-out clauses in the small print. “Afraid I’ve got to go darling. I’ve got the Union last year, according to some Eastern European countries number of empty or derelict bank since it was created in March 2010.
including Poland (up 4%), the premises – has also exercised the IBOA General Secretary, Larry
countered Stephen, illustrating that he had And make sure you charge plenty for it. Head of Compliance waiting to see me.” the European Central Bank –
Czech Republic (up 2.3%) and minds of local politicians like Broderick, said the Union would
compared with 7,200 branch Lithuania (up 1.8%). Lord Mayor of Belfast, Niall Ó “look to meet Mr. Roux at the earliest
closures in 2011. Altogether Muilleoir, who has challenged opportunity.”
the European Union had Northern Ireland banks around Northern Ireland
Handling Change
20,000 (or 8%) fewer outlets The impact of branch closures in to come up with radical solutions
at the end of 2012 than it Northern Ireland – both in terms to deal with empty branches.
had when the financial crisis
began in 2008.
of the reduction in facilities for
customers and consequent issues
With many empty bank
premises occupying prominent
Banks to sell banks
A history of IBOA
The severest cuts last year
were mainily focused in those
member States experiencing the
about access to financial services
has commanded the attention of
local politicians as the Assembly’s
positions in urban centres, the
Lord Mayor has called on their
owners to come up with some
M ore than 30 leading banks
have been put on standby to
advise the UK Government on the
greatest financial difficulties. Greece Finance Committee and Industry innovative approaches to revive return of Lloyds Banking group and
saw one of the biggest drops in Committee recently held the first town centres in meetings with Royal Bank of Scotland (RBS) to the
Published by the Collins Press and written by Paul Rouse and Mark Duncan, Ulster Bank, Danske Bank and
2012, axing 5.7% of its outlets, of a series of joint meetings with private sector.
Handling Change was specially commissioned by the Union. as bank mergers resulted in 219 local banking executives. First Trust Bank. JP Morgan Cazenove has been
The evolution of the IBOA offers a fascinating picture of Ireland – not least of branch closures – a trend that is Particulr concerns were raised He has also urged the banks appointed as lead adviser by UK
how banking moved from a thoroughly conservative industry to one so reckless expected to continue into 2013. by MLAs at the plight of social to do more to minimise the Financial Investments (UKFI), which
as to bankrupt the Irish State. Spain cut 1,963 (4.9%) of its welfare recipients who had been impact of any further closures on looks after the State’s 39% stake in
IBOA has a limited number of copies of the book for sale to members at the branches in 2012 while Ireland’s required to open bank accounts local shopping hubs. Lloyds and its 81% stake in RBS.
special discount price of E10 or £8 (including postage and packing). branch network contracted by when local welfare offices closed. “Banks should take steps to UKFI has selected 11 banks as
3.3% in 2012 compared to 3.1% in In circumstances where a town ensure that vacated properties do possible “bookrunners” (not book-
To order up to two copies at the special discount price, please send your not lie empty for months or years,”
Italy. was now bereft of any banking makers, ed) – who may co-ordinatie
name, address, the number of copies required and your IBOA membership Contraction was not the order facilities, the cost of transport to he said, “setting back efforts by aspects of the sale. The 11 are Bank
number – together with a cheque or postal order for the appropriate amount to of the day in every European access alternatives facilities could Belfast City Council and the new of America Merrill Lynch, Barclays,
IBOA History Orders at IBOA House, Stephen Street Upper, Dublin 8 or e-mail Union State, however. In Britain, have a particularly severe impact traders’ organisations to revive Citi, Credit Suisse, Deutsche Bank,
history@iboa.ie. the number of branches remained on people on low incomes. local retail clusters.” Goldman Sachs, HSBC, JP Morgan,
Morgan Stanley, Nomura and UBS,
the Swiss bank which already acts as
16 broker to both RBS and Lloyds.
17
DISCOUNT DISCOUNT
WINDOW SPECTRUM september 2013 IBOA THE FINANCE UNION www.iboa.ie www.iboa.org.uk www.iboa.ie www.iboa.org.uk IBOA THE FINANCE UNION september 2013 SPECTRUM
WINDOW
making your cash go further
Your IBOA subscription is
worth a great deal more
Taking it to a new level
Discounts and savings are always welcome – but most especially in times when money is particularly
tight. That’s why IBOA has been exploring ways and means to ensure that your take-home pay can go
further by achieving better value.
Our IBOAPlus scheme has been a modest attempt in this direction and has produced many worthwhile
savings for members. But this month, we are launching a new scheme for members which takes our
efforts to a whole new level – both in terms of the savings to be made and the range of products and
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The IBOA Group Scheme
The IBOA Group Scheme provides special member discounts through an easy-to-use online directory
covering hundreds of offers from leading brands and service providers – which you can access from a
variety of devices such as desktops, laptops, smartphones and tablets.
The range and value of these discounts is so great that you could more than cover the cost of
your IBOA membership subscription by the savings you can make!
The IBOA Group Scheme is free to IBOA members (including Pensioner Members and Associate
Members). So even if your are leaving your employment, it will be worth keeping up your link with the
Union – for this benefit alone.
Accessing the IBOA Group Scheme
Access to the IBOA Group Scheme is through the My IBOA area of the Union websites – www.iboa.ie
and www.iboa.org.uk – to ensure that the benefits are available to members only. But don’t worry
registering in the My IBOA area couldn’t be easier. You can now use either your IBOA membership
number or your employee (bank/work) number to verify your identity. Then set yourself a password
and get ready to make great savings!
While you are in the My IBOA area, you can also update your personal details – if you have a change
of address or other contact information. You can also set your communication preferences to tell us
how you wish to receive news and information from IBOA and to indicate any areas of special interest.
18 19You can also read
