The old expression “laughing all the way to the bank” seems to be in fact the reverse in this country, as unbelievably those walking away from the banks are laughing—another ‘fat cat’ has walked away from a financial mess with an astonishing €3 million golden handshake. This is yet another farcical situation, which has sparked public outrage, particularly as the State are pumping billions into bailing out the banks; thousands of jobs in AIB are under threat and a credit rating of ‘junk status’ has been given to our financial institutions.
The revelation this week that former AIB Managing Director, Colm Doherty was given an absurd amount after his contract was terminated last November—this termination was part of a condition of the State’s bailout of the bank. So far upwards of €20 billion has been dished out by the State to this bank. “Appalled” at this latest “banker scandal” was An Taoiseach, Enda Kenny’s reaction to this more than generous severance package.
The Irish Banks Official Association General Secretary, Larry Broderick slammed this culture at the top of the banking sector, especially when 2,000 jobs are currently threatened in AIB.
Meanwhile, Moody’s— a rating agency—downgraded the long-term bank deposit ratings of Ireland’s government backed banks to ‘junk’ status and the condemning Nyberg report, concluded that our financial crisis’s blame was in fact not due to an international crisis, but was in fact home-grown.
This report, the result of a six month inquiry by former international Monetary Fund economist Peter Nyberg, laid the blame across the board at the banks, financial regulators and department of finance. “Even though international developments contributed to the banking crisis, but it was due to domestic decisions which saw unsustainable financial risks being taken”. The sale and purchase of property in Ireland was a “national speculative mania” and there was “unhindered expansion of the property bubble”.
Most frightening was the fact that those “intelligent professionals” running the banks were not aware of the massive risks that they were taking and were “totally unprepared” for the downturn. Mr Nyberg stated that credit was thrown at people as following simple guidelines on the limits and sizes of loans were ignored and “herd behaviour” among banks was followed.
Timely enough, on Wednesday morning, the paramount symbol of these reckless years—Anglo Irish Bank— has its signage and logo removed from their buildings throughout the country. Reportedly, the removal of the sign from the St Stephen’s Green branch was greeted with applause by passers-by.
Following the Nyberg report, the Government aims to change the overview of bank boards and management. Finance Minster, Michael Noonan said that Government would ensure that the report would be referred to the Oireachtas so that it could make recommendations for the future of the banking sector. However, Mr Noonan said that the payment to Colm Doherty can’t be undone as it dates back to the former Government.
However, it seems that Mr Doherty may not be the only banker to walk away with such an exuberant pay package, as the Finance Minister has said that there are a number of old contracts still in existence, which were signed-off by the previous Government, which means that potentially even more ‘fat cats’ will be laughing all the way from the bank.
