JUNE 2013 - Financial Services Union
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JUNE 2013
SPECTRUM june 2013 IBOA THE FINANCE UNION www.iboa.ie www.iboa.org.uk www.iboa.ie www.iboa.org.uk IBOA THE FINANCE UNION june 2013 SPECTRUM
In this issue…
Loose change 5-11
• Giving capitalism a bad name –
UK’s Institute of Directors complains about bankers
• Pillar talk about Bank of Ireland and AIB –
Ross pleased with investment
AIB preparing for bond issue?
• Beyond the pillar – recent
developments in RBS and
Danske Bank –
More job losses and
financial difficulties
• Lifetrials of the
Slick and Shameless
– the men and women
who end up quids in,
no matter what!
IBOA’s new President, David Keane (see pages 16-17)
Current Accounts 12-21 •
•
Call for comprehensive banking inquiry
Off-shoring is new threat to bank workers and customers
Comprehensive Coverage of the • Toxic work culture causing workplace stress
• Conference confirms David Keane (above) as IBOA’s new
Union’s Biennial Delegate Conference President
• Performance management is tool for cutting staff numbers
• A Bridge Too Far – • Options for the future of pay and remuneration
The General Secretary responds to the Government’s direction on • Big Brother is watching you
reducing pay roll costs in the State-backed banks • Union rights deficient in Republic
Discount Window 22-23
Spectrum is published by IBOA – The Finance Union, • New Group Scheme for IBOA members offers massive savings
IBOA House, Stephen Street Upper, Dublin 8
and 29, Malone Road, Belfast. BT9 6RU.
on branded products and services
Telephone: 00353-1-4755908 and 0044-28-90200130
info@iboa.ie www.iboa.ie www.iboa.org.uk Hard Currency 24-27
General Secretary: Larry Broderick
Honorary Secretary: Tommy Kennedy • Surprise: austerity does not work!
Communications Manager: Séamas Sheils • The Great Crash replayed: history can repeat itself
Advertising enquiries to Anna O’Doherty
or Louise O’Donnell in IBOA House. Going Concerns 28
Spectrum is printed on recycled paper
and wrapped for posting in • The 2013 Lock-In: new legislation undermines union rights
oxy-degradable polythene at in the Republic
W. & G. Baird, Antrim, Northern Ireland.
2 3
LOOSE
Bank Notes 34-43
SPECTRUM june 2013 IBOA THE FINANCE UNION www.iboa.ie www.iboa.org.uk www.iboa.ie www.iboa.org.uk IBOA THE FINANCE UNION june 2013 SPECTRUM
CHANGE
Recent Developments in Major
Employments
• Crunch time approaches in AIB as Labour Court deliberates
• Claire steps back: AIB Officer returns to branch
Rights Issue 44-51 EU plans new
• Bank of Ireland pension review reaches endgame
after lengthy talks
banking laws
• Suffering in silence: Workplac e stress Tough new laws forcing banks to
• Bank of Ireland’s ‘new kid’ (below) is old hand • Counter-offensive: Union’s campaign on stress make it easier for consumers to
• Overtime is not compulsory in Bank of Ireland • New campaign to secure better protection for pensions understand bank charges and
switch accounts have been pro-
• Deal Me In – use your agreements • Yes: Youth Equality Solidarity posed by the EU Commission. It
• Pay rises for members in Danske Bank Northern Ireland • New communications commitment for IBOA members wants all member States to offer
• Further retail restructuring in Danske basic bank accounts, standardised
charges and easy switching.
Bank Northern Ireland
• Latest developments in Danske Foreign Exchange 52-55
Bank Republic of Ireland
• IBRC workers campaign for • Job losses at HSBC and Barclays Santander worst
• Crisis at UK’s Co-operative Bank
justice
• Lombard wind down • Criminal devastation in Dhaka for complaints in
• Fingleton faces legal action Britain
• Breakthrough on Ulster
Santander is the worst bank in
Bank restructuring Britain for handling complaints,
• Ulster Bank future again according to a poll conducted by
in doubt the consumer magazine, Which?,
among holders of savings accounts.
The Spanish-owned banking
chain receives the most complaints
and is also rated the worst at dealing
with them.
“When a bank has to deal
Life Cover with thousands of customers,” said
Which?, “it’s inevitable that it’ll get
56-63 Giving capitalism ‘a bad name’ things wrong from time to time.
But a true measure of good cus-
tomer service is how it deals with
• Fashion victims Fixed Interest 64-71 complaints.”
• Rough trade • High time for fair play, Sepp: Unions challenge treatment of
Public anger as bank executives on pay of £1m plus receive“rewards for failure”
• EU bans testing cosmetics in workers and players in Qatar before 2022 World Cup
O ver-paid bankers have “given
capitalism a bad name”,
rate-rigging and the mis-selling of
various products.
large banks were undermining New book on
• Cinematique: franchise reboot
Brian Lenihan
public faith in free markets.
animals according to the director general “Shareholder value has been “The wider population are
• Prize crossword of Britain’s Institute of Directors, destroyed, capitalism has been starting to become concerned,
• Sun bathing may be good for health • Picture board Simon Walker. given a bad name, key measures of incensed even, by the perceived
He said it was “unacceptable” the market have been manipulated Politicians and leading financial
after all • Sudoku that more than 500 employees of for cynical gains, taxpayers have
failings of private business. Those experts are set to contribute to a
voters are starting to question new book about the late Finance
• Employee tattoos: brand • Margin Call – with Stephen Malone Barclays and the Royal Bank of shelled out billions to bail banks the system itself. And that is Minister Brian Lenihan, which is
Scotland had received remunera- out, and yet vast reward packages understandable.” being co-edited by his aunt and
loyalty or just tat? tion over £1m in 2012 – a year in are still being handed out,” Mr He said that trying to put a former Government Minister,
which both banks were embroiled Walker said recently. positive gloss on banks’ recent be-
• Think fit: office workers in scandals involving interest The “rewards for failure” at haviour was like “polishing a turd”,
Mary O’Rourke.
“We have invited 22 people to
and added that only a substantive
like hunter gatherers? write an essay of 5,000 words each,
• Alco-tots: Can pregnant Banks worse than vultures in public eyes? change in behaviour, rather than
public relations spin, could restore
all connected with Brian Lenihan’s
themes and times,” she said.
public faith in the sector. Among those who have agreed
mums’ tipples affect Some would argue that, when it comes to giving capitalism a bad name, Rejecting the idea that it was his are the managing director of the
Simon Walker should know what he’s talking about – having previously job to defend all businesses, he said: International Monetary Fund,
babies’ IQ? worked as head of the BVCA – the body which represents British private “The IoD’s role is to promote good
Christine Lagarde; the Governor
business. To defend the reputations
• Buycott: New app for equity and venture capital sector. Considering that the latter are often of the millions of businesses who
of the Irish Central Bank, Patrick
referred to as “vulture” capitalists, it comes to something when British Honohan; and the UK’s former
do the right thing, we must call out
ethical consumers banks are seen to be less popular than “carrion-feeders!” those who do wrong.”
Chancellor of the Exchequer
Alistair Darling.
4 5
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CHANGE SPECTRUM june 2013 IBOA THE FINANCE UNION www.iboa.ie www.iboa.org.uk www.iboa.ie www.iboa.org.uk IBOA THE FINANCE UNION june 2013 SPECTRUM
AIB preparing for
Pillar talk bond issue?
AIB Group appears to be
making preparations to
Ross pleased BoI under fire return to the bond markets
on a more “normal” basis
with returns from in GB for raising before the end of the bailout
in December.
BoI investment rates on tracker The bank is reported to
have filed updated bond pro-
US billionaire, Wilbur Ross, said
mortgages spectus documents – which
incorporate AIB’s accounts for
recently that his investment in the year ending December
Bank of Ireland is one of the best Bank of Ireland has come in for 2012 and its auditors report
he has made. widespread criticism in Britain from March 2013 – with the
Ross took a 9.9% stake in the for its decision to increase interest Irish Central Bank and the
bank two years ago in conjunc- rates on around 13,500 tracker Companies Office in Dublin
tion with a consortium of US and mortgages. For some customers,
recently.
Canadian investors which acquired interest rates have risen from
Bank of Ireland shareholder, 1.35% to 2.99%. Andrew Tyrie, MP, Chair of the With these updated doc-
just under 35% of the equity.
In response to a question in a Wilbur Ross Tracker mortgages normally UK Treasury Select Committee uments, the bank can issue
recent interview with Bloomberg TV follow the base rate set by the bonds at short notice to the
Ross’s company, W. L. Ross, had been described as “lifetime,” market, if the opportunity
about his “best bet” in recent years, central bank in the jurisdiction. The
specialises in turning around dis- they believed that they would arises.
Ross said: “I think BOI is turning current Bank of England base rate is
tressed businesses and reaping the always have the same relationship
out to be a very good investment. at a historical low of 0.5%. While the bank has raised
The stock is up about 80% since we rewards when they recover. He told The bank has said that it was with the Bank of England base
Bloomberg TV that there were plenty
€1bn on the markets in two
helped privatise it.” permitted by the terms of the rate. deals since November 2012 –
“Bank of Ireland’s been very of opportunities in recession-hit mortgages to increase the margin Conservative MP, Andrew Tyrie,
issuing its first covered bonds
AIB causes stir with TV ad shot on iPhone
successful at modifying the mort- countries but that Ireland stood out over the Bank of England base rate who chairs the UK Parliament’s
as it was “a very unique economy.” powerful Treasury Select Committee, since the onset of crisis in
gages, changing payment schedules, under the terms of the mortgages,
“It’s a high-tech economy… which were sold before 2004. has requested that the Financial 2008 – these were regarded
capitalising arrears – things of that
sort,” he said. “86% of the mortgages That differentiates it from most of The rate increases also apply Services Authority conduct an by some analysts as excep-
they’ve modified are maintaining the rest of Europe,” he said. “Ireland to tracker mortgages at the bank’s investigation to determine whether “Bridge Sunrise,” AIB Bank’s location in Dublin City using a The ad also features the track, tional – rather than routine
didn’t need structural reform. All it Bristol and West subsidiary. the bank was guilty of mis-selling latest television commercial, smartphone. Petardu, from the album, Little Sparks, – transactions.
themselves on a current basis in
needed was to fill the hole that was However, customers have which was released in April, has “It was a big decision to shoot by Dublin-based band Delorentos,
accordance with the new terms,” he by including unfair clauses in the
left by the banking mess.” complained that as the mortgages generated more than the usual the ads on the iPhone. But once this year’s Meteor Choice music
said. mortgage agreements.
we did some preliminary tests, we award winners.
level of interest – not so much
knew that they were able to deliver With a standard television
because of its content – but high quality footage,” said Damian commercial costing anything up
BoI reported to BoI repaying
more because of the way it was
produced – on an iPhone 5.
Hanley, creative director at the
Rothco advertising agency.
to €250,000 these days, this low-
budget production is also likely to
be on target for debt to Irish
Appropriately for a commercial
promoting AIB’s mobile banking
service, the advert was shot on
Overall, the advert’s concept is
simple – based on a commuter train
have received a thumbs-up from
the mandarins in the Department
SME lending
journey across Dublin city. of Finance.
State – Boucher Bank to withdraw
Branch closures
Bank of Ireland has said that it
approved 25% more funding
customers’ free
Bank of Ireland CEO, Richie
for small- and medium-sized Boucher, said recently that
enterprises (SMEs) in the
Republic of Ireland in the first
the Irish State is “well in the
money” as a result of its
continue travel accident
three months of 2013. support for the bank since the
As the impact of the reduction in
insurance
With loan approvals since the financial crisis began in 2008.
beginning of the year now topping Boucher noted that the AIB’s branch network begins to be
€1bn, the Bank is on track to meet State had provided €4.8bn in felt across the island, three former
its new and increased lending target bailout funds to the bank, of AIB branches in the midlands are for AIB has advised its customers
for SMEs of €4bn in 2013. which €3.8bn had been repaid. sale at prices ranging from €110,000 that it will withdraw personal
Bank of Ireland’s Director of He added that the Irish to €135,000 – in Abbeyleix, Co. accident travel insurance –
Business Banking, Mark Cunning- Government also held €1.8bn Laois, Templemore, Co. Tipperary, currently provided free of charge
ham, said that two trends had worth of preference shares – and Urlingford, Co Kilkenny. on its credit cards – later this
emerged in the first quarter of this with an annual coupon of Meanwhile in Croom, Co. month.
year – a rise in the value of loans 10% – and a 15% equity stake Limerick, the local AIB branch re- Currently AIB credit card
granted to SMEs and some positive AIB’s Croom branch which closed recently (Photo: Limerick Leader).
worth about €830m. cently closed its doors for the last customers are covered for up
momentum in particular sectors in “The State is in the money time a century after it first opened. The others are Corbally, Croom, of its retail operations identified €64,000 if they are injured using
the economy, such as the hospitality, and it should be,” he said. “We Croom is one of eight branches Doon, Dromcollogher, Foynes, Glin, that changes in population and in licensed transport, provided at
manufacturing and healthcare sectors. got support and an invest- in County Limerick scheduled to Hospital and William Street in the customer traffic as well as improve- least 50% of the fares have been
The Bank also pointed out that ment for which we are most close as part of the bank’s wider city. ments in technology have led to a charged to an AIB credit card.
it had advanced half of all new grateful. transformation and cost reduction According to the bank, branch fall in demand for traditional branch However, it has been
credit to the farming sector in 2012. Bank of Ireland’s Director of Business Banking, Mark Cunningham “It is morally important programme. closures are necessary after a review services. reported that this benefit has
to me and my colleagues that often been misinterpreted by
that support is rewarded and
6 repaid.”
customers as full travel insurance.
7
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CHANGE SPECTRUM june 2013 IBOA THE FINANCE UNION www.iboa.ie www.iboa.org.uk www.iboa.ie www.iboa.org.uk IBOA THE FINANCE UNION june 2013 SPECTRUM
CHANGE
beyond the pillars
No more skeletons in
closet? Well, probably! More job cuts
Responding to one shareholder at the bank’s
recent AGM, RBS chairman, Sir Philip
Hampton, said it had been “disappointing
and branch
how many skeletons have come out of the
cupboard” since 2009. He said the bank had
“worked with regulators to put right past mis-
closures to
continue
takes, particularly the LIBOR and mis-selling
problems” as well as “the consequences of a
big IT failure” in 2012.
in RBS
“I think that we are through the worst.
There isn’t anything major on the horizon,” Stephen Hester Peter Nielsen Johnny Cameron Sir Mervyn King
he said. “But I might have made that state-
ment two years ago!”
RBS bosses highlight need to change Break up RBS –
“self-centred” bank culture… BoE Governor
The outgoing Governor of the
RBS needs to tackle the self- failures in systems and controls – before the crash in 2008, which Bank of England, Sir Mervyn King,
centred culture at the heart of and admitted that management had he described as “very stridently told the UK’s Banking Standards
mistakenly believed it was math- individual-orientated.” Commission recently that the idea
the banking industry, according
ematically impossible to “fiddle” Former head of investment of a bank being 81% owned by the
to its erstwhile Chief Executive, taxpayer, and also run at arms’ length
Stephen Hester. LIBOR submissions. banking, Johnny Cameron who is
In response to criticism from from the government, was nonsense.
The Chief Executive was one serving a lifetime City ban for his
the new Archbishop of Canterbury, “It would be much better to
of a number of past and present role in the collapse of RBS, told the accept that it should have been a
senior executives from RBS who Justin Welby, who is a member of Commission that he had tried in
the Commission, that “the risk of temporary period of ownership only,”
gave evidence recently to the UK vain to instil the right values in the he said, “to restructure the bank and
Parliament’s Commission on sheer immorality” had not been traders in his division.
managed, recognised or taken into put it back. The longer this has gone
Banking Standards in the wake of “You can’t impose moral stan- on, the more difficult it has become
account at RBS, Stephen Hester said
Watchdog to probe last the LIBOR rate rigging scandal in
which RBS was fined £390m by the
UK’s Financial Services Authority for
there had been “hubris” during the
boom years that had bred a culture
dards on people who don’t wish to
be moral,” he said.
to return RBS to the market.”
Sir Mervyn added that it was
year’s IT meltdown at RBS Cameron, who received around not “beyond the wit of man” to
misconduct described by the FSA as of selfishness.
£4m in bonuses between 2006 and split the beleaguered lender into a
‘deliberate’, ‘reckless’ and ‘blatant’. “We were too slow to recog-
2007 when the manipulation of the good and bad bank – perhaps in the
In the course of a four-hour nise the behaviour and catch it,” manner of Northern Rock where
Britain’s new financial watchdog has launched RBS chairman, Sir Philip Hampton, told the bank’s recent AGM that further jobs cuts would session with the Commission, the admitted Hester, who added that LIBOR rates appeared to have been
an investigation into last year’s IT meltdown be necessary. at its height, added: “Almost every the ‘bad bank’ has remained under
RBS executives made a number of solving RBS’s cultural problems government control while the ‘good
U
at Royal Bank of Scotland, which affected lster Bank’s parent company, Royal Bank of Scotland Group recently announced frank admissions about the bank’s would help return it to the private bank in the world has been involved
bank’ was sold to Virgin Money.
many thousands of Ulster Bank customers as 2,000 more job losses amid warnings that further jobs and additional branch shortcomings. sector. in some way in this. It’s as much
well as millions from RBS and NatWest. closures would be necessary before its restructuring is complete. Head of Markets, Peter Nielsen, Nielsen also blamed the com- about the culture of traders as any
The Financial Conduct Authority (FCA) conceded that there had been major pensation culture that existed one bank.”
– which took over the supervision of banking stan-
dards in April – started an investigation into the IT
“We’ve got to have our branches where our
customers are, not always where we have had
Two separate rounds of job cuts have taken
place in Ulster Bank – each in the order of 950. Citi to close its
…IBOA offers to help with change! Waterford office
failures to determine whether enforcement action them for decades,” Board Chairman, Sir Philip The second restructure, announced in early 2012,
should be taken. RBS said it would work with regu- Hampton, said at the Group’s recent Annual is still to be completed – with over 500 staff
lators in Britain and Ireland to improve its services. General Meeting in Edinburgh. having left the institution in recent months.
“Last summer’s IT failure was unacceptable,” “We have work to do over the coming years Hampton said RBS aims to have completed Fifty jobs are under threat at Citi’s
said the bank. “We have already made significant to get our business in the right shape to deliver most of the restructuring of the Group next year, IBOA General Secretary, Larry as well as customers and the “However, I should point Waterford base after the bank’s sur-
improvements and over the next three years will these ambitions, and that could mean further so that the British Government can begin the Broderick, has welcomed the public at large. out that treating customers fairly prise decision to cease operations
invest hundreds of millions in our systems. impacts on employees.” process of selling off its stake by the end of 2014 acknowledgement by RBS senior “If this wish for a change starts with treating staff fairly. An in the South East by the end of this
While this particular “IT incident” has cost RBS outgoing Finance Director, Bruce Van – ahead of the next British General Election in management that the culture of in the culture indicates a real ethical bank cannot operate on a year as part of a wider global re-
RBS £175m ($267m) in compensation and other Saun, declined to give specific figures for the 2015. banking must be changed. commitment to tackle this issue bipolar basis,” he said. structuring programme.
charges, the soundness of its technology infrastruc- likely total of job cuts – but said that the “vast However, with RBS shares in the doldrums “For some time now,” he said, – as opposed to a public display “Ulster Bank, above all, The Waterford unit – located in
ture has often been called into question. majority are now behind us.” – especially after the surprise announcement of “IBOA has urged all of the stake- of humility for the benefit of the should understand that, regard- the IDA industrial estate – is involved
As recently as March, the failure of their mobile RBS has announced 37,000 job cuts since Stephen Hester’s departure as Chief Executive, holders in banking to take steps to UK Banking Commission – then less of recent developments in in Citi’s hedge fund services. Some
banking applications left RBS, NatWest and Ulster the £45.5bn State bail-out in 2008 and 2009 they may have some way to go to reach the 407 discourage recklessness and greed IBOA is willing to engage with e-banking, staff remain at the of its staff may be offered redeploy-
Bank customers locked out of their accounts for – the biggest in the world – gave the British pence target which would allow the British State and to restore ethical prudential RBS and with Ulster Bank to heart of the relationship with the ment in Citi’s Dublin hub which
about six hours during one working day. Government an 81% stake. to break even on its investment. banking for the sake of employees make this a reality. customer,” said Broderick. currently employs 2,200.
8 9
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CHANGE
lifetrials of the
slick & shameless
For a fair day’s UBS buy Orcel!
pay… Swiss bank, UBS, which has been
mired in controversy for some time,
managed to attract further adverse
commentary recently with the reve-
Amanda Staveley of PCP Capital
lation that it had made a ‘golden hello’
Partners is reported to have been
payment of SFr25m (£17m/€20m)
paid £29.5m for her advice on to one of the key executives behind
the deal which brought together the catastrophic sale of ABN Amro
Barclays Bank and a group of to Royal Bank of Scotland – an event
wealthy Gulf investors led by that is widely accepted as pivotal to
Sheikh Mansour at the onset of the the collapse of RBS.
banking crisis in 2008. UBS took Andrea Orcel from
The substantial £12bn capital Bank of America Merrill Lynch to
investment from Abu Dhabi and become its new head of investment
Qatar enabled Barclays to avoid a banking in the wake of the scandal
State bail-out – the fate that befell involving the rogue trader, Kweku
Jamie Dimon, Chief Executive of JP Morgan Chase
its British banking counterparts, Adoboli.
Tempest in teapot creates $11.5m Lloyds-HBOS and RBS. In his new role, Orcel is super-
A former girlfriend of Britain’s vising the restructuring of UBS’s
Prince Andrew according to some investment banking operations
hole in Jamie’s pay packet sections of the British media,
Staveley has also been credited with
brokering Sheikh Mansour’s earlier
which is expected to result in 2,000
job losses by the end of the year. UBS’s new head of investment banking, Andrea Orcel
acquisition of Manchester City
Hourican falls
Spare a thought for the boss of ries on both sides of the Atlantic, led to Although there is no evidence
JP Morgan Chase, Jamie Dimon calls for tighter regulation of banks by Football Club for £210m. that Hourican was directly implicated
(not to confused with former President Obama. And rather like recent con- in the LIBOR-rigging scandal, he
on his sword
While the bank still reported cerns about the role of agents in was deemed culpable because some
Barclays chief, Bob Diamond)
record profits, Dimon was given a the transfer of professional foot- of the rogue activity continued until
who had his bonus cut in half ballers, the UK’s Financial Services
following the bank’s $6.2bn slap across the wrist for essentially as late as 2010 – so he should have
Authority is said to be investigating John Hourican, head of RBS’s
believing what he was told by sub- been aware of it.
London trading fiasco. the role of advisers in arranging investment arm since October
The losses were initially dismissed ordinates. His total compensation 2008, resigned from his post in the
major investments in banks such as Taxing Matters
by Dimon as a “tempest in a teapot” package was cut to $11.5m from Barclays. wake of the LIBOR-rigging scandal
– but they sparked government inqui- $23m for the year before. – which resulted in fines of £390m Meanwhile RBS is reported to be
(€460m) being levied against the Hard times for John Hourican co-operating with the Dutch tax
bank. authorities investigating the bank’s
However, he was contractually
“Clerical errors” Reported to be the bank’s most
highly paid employee at the time
of his departure earlier this year,
entitled to a pay-off equivalent to
his annual basic salary of £700,000.
purchase of a house in Amsterdam
from Hourican in 2009.
Hourican had bought the prop-
come at a cost
And of course, he has other
Hourican is said to have foregone fringe benefits to fall back on from erty for €4.7m in 2007, when he was
£4m in share options due from pre- his time in RBS – like the $7.5m working as Chief Financial Officer
vious years as well as a substantial profit he was reported to have made of RBS’s newly acquired Dutch
More bank bosses deserving of bonus of around £2m for last year. in 2012 from selling RBS shares. subsidiary, ABN Amro. On being
your sympathetic consideration recalled to Britain in 2009, he sold
are Standard Chartered’s Chief it to the bank for €4.9m
Because
Executive, Peter Sands, whose After struggling to sell the
annual bonus has been cut by house for several years, RBS is
10% from $3.5m to $3.15m, reported to have offloaded the
Rich little poor guy and his finance director, Richard
Meddings, who has suffered a Standard Chartered’s Chief they’re worth property at a loss of around €2.2m
– in what sounds like a proverbial
Executive, Peter Sands Dutch auction!
it…
In a land of banking behemoths, similar 10% drop in his bonus transactions leaving the financial The precise nature of the inves-
boasting trillions of dollars worth from $2.4m to $2.16m – even system vulnerable to “terrorists” tigation by the Dutch authorities is
of assets, it may come as a surprise though the bank recorded a tenth and “drug kingpins” in the six years unclear. But media speculation is that
to discover that the sixth best paid successive year of record profits. up to 2007. Senior executives em- they are questioning whether the price
banker in America and one of its A key factor in the reduction is The bonus cut is the first real ployed by Goldman Sachs the bank is supposed to have paid for
richest is the CEO of a bank with a reported to be the $667m (£443m) acknowledgement by the bank of in London received an the property is unusually high – and in
relatively paltry $35bn in assets. penalty levied against the bank last the gravity of the sanctions breach. average pay package of Although the average for effect masks a cash bonus for Hourican,
Reputed to have earned $15.2m year for breaching United States Standard Chartered’s chairman,
£1.8m in 2011. London is much higher than which should have been disclosed.
last year, James Herbert (above), sanctions against Iran. Sir John Peace had earlier been forced
Goldman’s company-wide If that were to be the case, then
is the Chief Executive of the First Standard Chartered was accused to retract comments describing the According to recent
Republic Bank of San Francisco both RBS and Hourican could be
of hiding $250bn of sanctions-busting breaches as “clerical errors.” regulatory filings required average for 2011, it is sub- liable for tax in Holland.
which specialises in “super-prime” under EU rules, 95 Goldman stantially down on 2010
mortgages for mansions and in employees shared £169m – – when it reached £4m.
10
wealth management for high net
worth (i.e., extremely rich) clients. 45% in cash and the rest in Could someone organise 11
shares. a whip-round?
CURRENT
ACCOUNTS SPECTRUM june 2013 IBOA THE FINANCE UNION www.iboa.ie www.iboa.org.uk www.iboa.ie www.iboa.org.uk IBOA THE FINANCE UNION june 2013 SPECTRUM
Prudent approach
delegate conference to investments
improves Union
financial position
T he Union’s after-tax surplus
on its accounts for 2012 has
increased as a result of changes
to its investment portfolio and
prudent management of over-
heads, Honorary Finance Officer,
Sharon McAuley, reported to the
Biennial Delegate Conference.
Despite falling income from
members’ subscriptions – as a result of
significant job losses throughout the
Banking inquiry long overdue
Honorary Finance sector, IBOA has managed to whether
Officer, Sharon the financial storm by close and careful
McAuley (First
Trust Bank) attention to all aspects of its opera-
T he crisis in Irish banking has
had an unprecedented impact –
ment and the auditors;
whether the apparent inaction of
tions – including changes to the way
the Union manages and reports on its
Pay cuts a bridge too far – Broderick
on the economic and social life the Regulator was due to lack of investment.
of this island – ushering an era legal powers, lack of resources, or
Following a root-and-branch review
lack of interest;
of savage austerity driven in part by the Union’s Audit and Investment
– the role of Government in pro-
at least by the effective loss of our moting economic and fiscal policies Committee, costs involved in man-
I f any bank or Government tries to impose a pay cut “For that reason, IBOA welcomed the Irish Government’s economic sovereignty. without thought for their long-term aging its investments were reduced
Above: IBOA
original decision to appoint an independent body to review pay “As for the banking sector itself, it consequences; and
for bank workers on a unilateral basis, then IBOA will General Secretary,
has utterly transformed – in the way significantly – while changes to
exercise our internal democracy by asking members to Larry Broderick, in our industry,” he said. “But what we did not realise was that – perhaps, equally importantly, what
a car is transformed when meeting an investment strategy, itself, have
consider our response – up to and including industrial speaking at the this was not an independent review. It was a review with a very didn’t happen under each of these
clear agenda to make the facts fit an outcome that had already articulated truck head on,” said the headings. yielded returns which have exceeded
action – in order to prevent the further cannibalising Union’s recent
Union’s Honorary Finance Officer, expectations.
Biennial Delegate been determined – and that outcome was to dump, once again,
of our members’ pay, declared IBOA General Secretary, Sharon McAuley. “Bank workers have “While some may see this proposal as Progress in these areas has helped
Conference in on low paid bank workers.
Larry Broderick. “Unfortunately, despite fine rhetoric by Government,
suffered devastating losses and have seeking retribution or revenge,” she said,
Croke Park, Dublin to mitigate the impact of the fall in
Speaking to the Union’s recent Biennial Delegate taken more than their fair share of pain. “there are no hidden agendas as far we
(Photo: Tommy Mercers – whom they appointed to carry out the review – did Union membership in the last two
Conference in Croke Park Dublin, Broderick said that IBOA “Yet incredibly, we are now five years are concerned.
Clancy). not engage with IBOA or bank workers. They refused to agree years – which reflect the significant job
had challenged the Minister to review his direction to the into the crisis and there has been no “Even a minor traffic accident is
joint terms of reference. They did not engage with the Union on official investigation into how this crisis investigated – not to mention the mis-
State-supported banks and had initiated the “Bridge Too losses in Irish banking. Membership
Far” campaign which had resulted in thousands of e-mails any aspect of the report and, indeed, shared their findings with came about, who was responsible, and appropriation of even small amounts
the Boards of each bank and sought approval before issuing the of the Union fell from 21,193 in 2011
being sent to public representatives in both the Republic and who should still be held to account. of cash in any financial institution – yet “Because this
report, and totally refused engagement with the Union “The closest we have come to such to 19,079 as the effect of widespread
Northern Ireland.
“So much for the Government’s much vaunted commit-
here we have the most catastrophic event much we know:
“With the crisis in Irish banking,” Broderick said, “we saw an investigation is in the legal proceed- in recent memory – in terms of the degree redundancies and early retirements
ment to transparency!,” declared Broderick. the crisis was
the collapse of our members’ remuneration levels – with all ings against some individuals like Seán of hardship inflicted on the population began to be felt.
bonus payments and productivity payments removed. And as “While the Mercer report is helpful in some respects, it is Fitzpatrick (below) associated with the and no-one in official Ireland seems not caused by a
Administration costs rose faster
bank share prices also collapsed, an important financial buffer fundamentally flawed in others. For example, the purported spectacular collapse of Anglo Irish to be in any rush to examine the handful of rogue
average increases for bank staff are not reflective of the fact that, than inflation as a result of increased
was also wiped out for many of our members. Bank,” she said. “But that is far from causes. elements in one
since 2010, IBOA members have received no increases either legal costs as well as more frequent
“Pensions in all banks came under attack. Many other the comprehensive account that “We need this inquiry to learn bank or even of
benefits for bank workers have been eroded or phased out cost-of-living or contractual we need if we are to avoid repeating for the future. Otherwise there is meetings and higher expenditure on
“The report also fails to identify how it reached its conclu-
a few rogues in a regulatory compliance and external
completely. Increments and performance awards, specifically the same mistakes in the future. every chance that this tragedy
stipulated by contract, have not been paid - even for workers on sions but, unbelievably, relied upon internal information from “A properly constituted and its sorry legacy will be few banks. advisers.
very modest pay. We are not the fat cats enjoying the rich cream. bank managements – including payments made in promotion, public inquiry with a repeated with even more A further contributory factor to
“On the other hand, the senior executives, who caused retention payments and bonuses to key senior people in the legal construct should damning repercussions,” “It was a systemic the increase in administration costs in
the problem, were allowed to retire on golden parachutes of Bank – to calculate their average increases. be put in place to said McAuley. failure on a
pensions and other rewards. Those who remained were given “Mercer does not make any recommendations on pay but identify: “Indeed, if we took 2012 was the decision to undertake a
colossal scale. major renewal of the Union’s IT infra-
incentives in the form of a pot of €60 million for 100 executives set out a number of options to be considered. – what happened the time to con-
in Bank of Ireland, a €100 million fees package for consultants “However, the report does substantiate IBOA’s view that in each of the duct a thor- It was the structure in order to gear IBOA up to
in AIB, as well as millions spent on payments to retain sup- bank officials’ pay and pension benefits have been substantially institutions; ough review disastrous meet the needs of its members into the
The suggestion reduced and confirms that the vast majority of staff in our in- – what was of these past creation of many
posedly key executives in AIB and IBRC who promptly left on future. Such investment is required on
that further the role of
pensions or else in search of even greener pastures elsewhere. dustry are on less than €45,000 a year.” events, we may not authors.”
“An army of consultants swarmed in and out of the banks cuts are “So, for Government to come out and suggest that future the Board, need to be suffering a periodic basis – but does not consti-
like bees after honey – and no one baulked at paying their exor- required in cuts of 6%-10% in bank workers’ pay are now required is outra- the senior so much pain in the present tute a recurring annual outlay.
bitant fees,” noted Broderick. bank workers’ manage- – never mind the future.” Sharon McAuley Full details of the Union’s finances
geous,” said the IBOA leader.
pay is are available to members on request to
12 outrageous.
Larry Broderick
Jane Higgins, Administration Manager,
IBOA House. 13
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Pictured left:
Word-of-mouth recommendations, combined with delegates show
direct experience of the Union in action in the work- workplace stress
place, are more valuable testimonials than all the the ‘pink’ card
(Photo: John
promotional material we can produce. Our objective in McElroy).
organising is also about revitalising and re-energising
existing members. and right: IBOA
The commitment and attitude of Senior Industrial
our members has a direct impact on Relations Officer,
the Union’s capacity to deliver positive Billy Barrett.
outcomes. If members are active and
engaged in the Union, then the Union
will be far more effective.
Honorary Secretary, Tommy Kennedy
Honorary Secretary, Tommy Kennedy (left); President, Jessie Doherty and
General Secretary, Larry Broderick, at the Conference (Photo: Tommy Clancy) Toxic work culture leading to Tiger kidnapping
For all its flawed methodology, the Mercer Report
could still not escape the conclusion that bank workers
Offshoring: new threat to increasing levels of stress still a threat
have taken a substantial reduction in remuneration
over the last five years. Many bank workers have not
only been denied performance-related customers as well as bank staff I rish banks are falling far short of
what is needed to manage work-
place stress effectively, IBOA
ally require a lot more attention at a time
when fewer staff are available due to job
cuts, branch closures and new branch
A growing concern for the Union
is the security of bank workers
both within the workplace and even
payments (even though contractu- Communications Manager, Séamas layouts which seek to encourage cus-
A very dangerous scenario is “But just as the tide is on the turn else- tomers to use ATM-like devices rather within their own homes as a result
ally guaranteed): they have also seen Sheils, told the Union’s Biennial
emerging – not only for bank where, Irish banking is dipping its toe in than engage in human contact,” he said. of the rise of tiger kidnapping, said
the effective liquidation of their Delegate Conference.
workers but also for customers and the water and we are seeing various oper- “Under the circumstances, abuse IBOA Senior Industrial Officer,
shareholdings – which were part ations in AIB, Bank of Ireland and Ulster In a survey of almost 600 Union of bank workers by customers has been
the integrity of the banking system activists working in the Republic, Billy Barrett.
of the reward system within their Bank, relocating outside the jurisdiction reported by 78% of survey respondents.
as a whole – because the regulator is Northern Ireland and Great Britain, This concern has intensified recently
institutions. not equipped to monitor the opera- or about to. Apart from the obvious Apart from upsetting the staff member
as public spending cuts have hit policing
consequences for local jobs – especially 83% of respondents consider that their at the receiving end, these events also
Mairead Kelleher, Bank of Ireland, Tralee tions of Irish bank which take place budgets, so bank workers feel even more
in an era of high unemployment – this employers’ response to work stress is affect colleagues and other customers in
outside the jurisdiction. development also raises questions about unsatisfactory. the vicinity. exposed.
Despite many recent examples of This is in a context where almost “As the crisis has unfolded, the tone “For many bank workers the pros-
the security of the infrastructural assets
the dangers of off-shoring in a sector as 96% reported that the level of stress had of abuse from customers has gradually pect of falling victim to tiger kidnapping
within banking.
strategically important as banking, the become more intense since the banking changed from the raw emotion of cus-
“You would have imagined,” con- is a constant threat – and for their fami-
lessons are not being learned, the Union’s crisis began. tomers angry at the revelations of the
tinued Barrett, “that the regulator would lies too,” he said.
recent Biennial Delegate Conference The key factors in these rising stress reckless behaviour of senior executives
have some concerns about such a devel- “Recently one bank branch was
heard. levels identified in the survey were to a growing frustration at the new mea-
“Banks in the UK which adopted opment – since, as the Ulster Bank IT raided twice within a two-week period.
incident last summer clearly showed, heavier workloads (with 71% saying sures being introduced as part of the
Northern Ireland needs special attention within an this practice over a decade ago are now staffing levels were insufficient), which restructuring of the sector. For most cus- It is bad enough for members to have to
it can have such a profound impact on
overall strategy for Irish banking since it may suffer beginning to question the assumptions were being exacerbated by the con- tomers these new developments can be go through one armed raid,” said Barrett.
behind off-shoring so many activities to the capacity of a financial institution to
in terms of the priorities of both Irish, British and tinuing pressure to meet sales targets summed up in five words ‘higher charges “But to have to suffer the same
places like India,” said Senior Industrial conduct its core business.
indeed European banks. We saw how AIB was ready to Bank workers are still under pressure for reduced services,’” said Sheils. fate shortly afterwards not only leaves
Relations Officer, Billy Barrett. “But in IBOA’s exchanges with the
to meet steep or often wildly unrealistic – “Most workplaces come under workers deeply traumatised but also
sacrifice First Trust Bank and AIB (GB) if necessary. “What seemed like a good idea regulator in Dublin, it seems that their
targets. “There has been no let-up in the
concern for fitness, probity and com- pressure from time to time as a result of leads to the inescapable conclusion that
We also saw where Ulster Bank comes on paper – especially to the company pressure to sell even though the reckless sudden surges in activity or unforeseen
accountant – has not been realised in petency only runs as far as the human the bank’s management is not taking its
in RBS’s pecking order during the IT pursuit of sales targets was a key element emergencies. But when these temporary
practice and complaints abound about beings: it does not include the computer obligations for their security seriously.
meltdown last summer. The need for in the culture that led to the crash,” he said. emergencies become a permanent crisis
the deterioration in customer service software or hardware which has become “The Union’s Executive Committee
a banking service with strong roots in “Frontline staff are also having to of a long-term systemic nature, this
mainly due to the fact that the service such an integral part of virtually all Séamas will continue to press bank manage-
spend more time dealing with customers leads to workplace stress which reflects
the local community is clear. providers offshore lack the local knowl- banking operations and which looks set
in distress,” said Sheils. a toxic work culture and poor opera-
Sheils, IBOA ments to become more proactive in this
Claire Walsh, edge – whether it’s a matter of geography, to become even more so in the future. Communications
“Whether their distress is financial tional decision-making cascading down area and to liaise more closely with the
IBOA’s outgoing AIB Group Officer culture or something as simple as “So when the Irish banks tell the Manager
or emotional - these customers gener- throughout the business,” he continued. security services to ensure that the risk
dialect,” he said. Irish Central Bank that their offshore IT
“Indeed the shortcomings have systems are in good working order, the is minimised and would-be raiders are
proven so marked that some banking regulator seems to have neither the com- For more on the Union’s survey of workplace dissuaded from following this course.
Prevention, as they say, is generally more
groups, like Santander, have decided to petence nor the inclination to take the
move back ‘onshore.’ matter any further,” he said. stress, see pages 48-51 effective than cure,” he said.
14 15
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Keane to face the future IBOA’s new President
T he ability to adapt to change has
been one of the principal reasons
why IBOA has been so successful as
upside down.
The dramatic reduction in staff
numbers in all financial institutions
areas we will examine in a compre-
hensive review of all of our activities to
ensure that we make the best possible
an organisation. has affected our membership numbers use of our resources on behalf of our
Great changes have been dealt with – while the centralisation of functions, members into the future.
in the past. But even greater change is on along with alternate methods of deliv- Having been honoured to be elected
the way and will have to be managed ering service, are changing the structure as President for the next two years, I
into the future. As in the past, IBOA, of banks. Consequently, we need to aim to progress this review so that we can
itself, needs to change its own structures develop new responses to representing bring forward proposals before our next
to respond to the changes in the finan- our members within these new structures. Biennial Delegate Conference in 2015
cial services sector. The outgoing Executive Committee to address whatever changes may be re-
During the last five years, every- has been reflecting on the structure of quired to continue to maintain IBOA as a
thing we have traditionally taken for IBOA and its capacity to operate in this major influence on behalf of its members
granted – like salary increases, depend- changing environment. in the financial services sector.
able pension arrangements, protected Membership strength, service delivery,
terms and conditions, job security – have representative structures, financing and Dave Keane
come under attack and been turned professional services are some of the President
Keane to embrace the past
I BOA’s new President, Dave Keane,
describes himself as “very fortunate
to have been born in Waterford and
As his father was a trade union
activist, he recalls many vigorous dis-
cussions in the house about trade union
period as the Union’s Sports and Social
Secretary. In 2005 he was elected by
his fellow Bank of Ireland Executive
raised in Wexford – an area of strong issues. So on his appointment to Bank of Committee members as the Union’s
trade union tradition.” Ireland’s Enniscorthy branch in 1971, he Bank of Ireland Group Officer – which
joined IBOA. The Union’s Wexford and resulted in his secondment from front-
District Area of IBOA had a long tradition line duties in the bank.
of active and committed members. Though now thrust into a prominent
Transferred to Bank of Ireland’s role, Keane is quick to acknowledge
Arklow branch in 1975, Keane met an AIB the support and commitment of his
colleague who inspired him to become Executive Committee colleagues. “Team-
active in the Union. work is crucial. IBOA has always been
IBOA’s Wexford Area Secretary and fortunate to have great activists.”
Executive Committee representative, Among those activists he counts
Ken Doyle, who was later to become himself fortunate to have worked with
President of the Union, organised a very and learned during his career so far,
active membership not only in terms of the Union’s new President cites former
industrial relations but also in terms of Presidents Brian Deasy, Gerry Flynn
The Wexford Lock-out Memorial social events which were an important and Margaret Browne along with Ulster
part of the fabric of the Union at that Bank Executive Committee member,
The Wexford Lock-out
time. Joe Kelly, and, of course, another former
With Doyle’s encouragement, Dave President in Ken Doyle.
Keane became a Branch Rep – the first As for the Union’s professional staff,
Although the centenary of the 1913 Lockout in Dublin is commem- step on a path of activism that led him Dave Keane name-checks former and
orated this year, it was pre-dated by another lock-out in Wexford to become an Area Council member, current General Secretaries, Ciaran Ryan
a Bank District Secretary and then, in and Larry Broderick, along with former President Dave Keane: (top) receiving Presidential chain from predecessor, Jessie Doherty; (middle) with Wife, Geraldine; (bottom) in discussion
– over a six month period from 1911-12. Led by ITGWU organisers, with General Secretary, Larry Broderick (Photos: Tommy Clancy).
1994, a member of the Union’s Executive and current Senior Industrial Relations
Keane to make a difference
James Connolly and P. T. Daly, along with Wexford native, Richard
Corish, the workers in three Wexford foundries – including Philip Committee for the Waterford/Wexford Officers, John O’Connell and Gerry Hanna,
Pierce and Co – were locked out when they tried to exercise their area in Bank of Ireland. with whom he has worked very closely
right to organise collectively. A thoughtful and circumspect rep- on Bank of Ireland issues in recent years.
In an irony of history, IBOA President, Dave Keane, is linked to resentative, Keane accumulated a wealth Married with three children, Dave’s
the Lock-out through an aunt who married Philip Pierce junior. “I am of experience in the role – including a main pastimes are golf and soccer.
not so sure how impressed old Philip might be with me as President
of IBOA. But then one hundred years after the event, unions are still
16
operating on behalf of their members while Philip Pierce & Co. has
long since ceased to exist. 17
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delegate conference
Professor Phil Taylor of the University of Strathclyde delivers his presentation to the Biennial Delegate Conference in Croke Park.
Total rewards: more than pay
Programmed for failure New approaches to remuneration can improve job satisfaction
Performance management has become instrument to cut staff numbers
W ith most bank workers having
seen little or no improvement
in their living standards for some
in Irish banking around fitness and
compliance where staff are increasingly
required to demonstrate their ability to
Main photograph
above (from left):
Sandy Boyle, UNI
time, the prospect of a return to some meet objective standards set by the reg- Finance, Pauline
T
kind of normality within the sector is ulatory authorities. Grace, Lecturer in
he relentless pressure of punitive perfor- “The widespread experience of employees is put on improvement plans, sometimes known
eagerly awaited. However, traditional Sandy Boyle from UNI Finance Human Resources
mance management systems – intended of top-down, highly-pressurised and intensified as PIPs, which can cause huge anxiety and stress
approaches to remuneration may no argued that the future of remuneration at University College,
to push up productivity – is instead creating a work, with most facing an array of often un- because they can be almost impossible to get out of.
longer deliver for either employers or in banking must reflect the need to shift Dublin, and Kevin
stressed, sick and insecure workforce, according achievable targets,” he said. “Workers are being “The evidence is that these PIPs most
employees, according to Kevin Empey, the culture of the industry away from Empey, Director of
to Professor Phil Taylor of the University of increasingly tightly monitored and measured often are not about providing the coaching and
Director of Consulting at Towers Watson. an arbitrary target-driven agenda in the Consulting at Towers
Strathclyde. and then placed into performance appraisal support needed to help employees improve but
In a wide-ranging panel discussion direction of a renewed focus on service Watson in Ireland.
In a very informative and entertaining pre- categories. are for ‘performance managing’ people out of the
at the Biennial Delegate Conference on to customers.
sentation to the Biennial Delegate Conference, “Frequently, these are in pre-determined dis- door.
the future of remuneration, Empey said This shift would result in a win- Individual pictures
Professor Taylor said that the “unrelenting in- tributions – sometimes known as the Bell curve “The speed of these ‘managed exits’ is as-
that while an acceptable level of pay will win-win scenario – with crucial wins (from top down):
tensity” of work generated under new forms of – with a certain percentage deemed to be un- tonishing,” said Phil Taylor noting that in two
obviously remain core within any system for customers, bank employees and the Kevin Empey,
performance management is having a signifi- derperformers, irrespective of the level of actual organisations examined as case studies in his
of rewards, other factors could play a banking institutions. Pauline Grace,
cantly negative impact on employees. It is used as performance.’ research only 12 weeks elapsed between workers
more significant role than in the past in Facilitator, Séamus Dooley, Irish Sandy Boyle and
a cut-price way to push ‘under-performers’ out of ‘This is when the problems really begin for being put on an improvement plan and then
enhancing the overall value of the deal Organiser of the National Union of Séamus Dooley.
the door. employees, because ‘underperformers’ are then being exited.
for the employee. Journalists, said that the key to any
Other such factors could include system of pay and reward was con-
career development and mentoring, fidence: without some sense that the
flexible work, wellness initiatives, work- arrangements were reasonable, the
life programmes, confidence in the system would not deliver the desired
senior management and even the com- outcome for either the employees or
pany’s role in society. employers. In this respect, the credi-
Pauline Grace from University bility of senior banking leaders in the
College, Dublin, highlighted a possible eyes of their own staff could be critical.
role for competency pay in the future Despite their widely differing per-
as an alternative to rewards based on spectives, there was a surprising level of
meeting numeric targets. common ground between the speakers
Some form of competency-based and plenty of food for thought for dele-
pay may be particularly appropriate at gates as they continue to reflect on the
this time in light of recent developments objectives for the future pay agenda.
18 19You can also read
