Monday, February 09, 2009

Time for Bankers (& politicians) to go.

Media reports at the weekend that negotiations on recapitalisation between the government and the two main banks are ongoing but with a number of issues unresolved. One in particular seems to be the refusal of AIB Chief Executive Eugene Sheehy to step down, and he’s clearly got the support of the AIB board in this stance.

The reality is that it’s past time for Bank of Ireland Governor (chairman) Richard Burrowes to join his Chief Executive Brian Goggin in heading for the exit. AIB Chairman Dermot Gleeson and Chief Executive Eugene Sheehy should also be on their way.

The buck has to stop with them for the devastation of shareholder value in their companies, that’s what they’re paid the big money for. Indeed, the rest of the boards of AIB & BOI should also be actively considering their positions.

The issue is about the competence, or lack of it, displayed in the lending decisions of those banks and the consequences now for shareholders and, perhaps, for the very survival of the banks.

It is not a question of personal or business integrity, as has now arisen at Anglo Irish Bank. However, the longer these senior AIB & BOI bankers refuse to accept that the buck must stop with them and that there are inevitable consequences, the more it does raise the question of integrity.

I do have some sympathy with these bankers for having to endure the public hectoring of Government ministers. The sheer hypocrisy of these politicians, many of whom were directly responsible for the highly reckless fiscal policy which got us here, is particularly galling. For over a decade, every annual budget, presided over by a Fianna Fail minister, poured petrol on an already over-heating construction market.

The public are overdue a contrite apology from our political leaders, in particular Brian Cowen. Senior bankers must console themselves with the thought that they may well be joined in early retirement by senior politicians, when the public finally gets an opportunity to pass judgement at the ballot box.

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