In Ireland last week, cartel spotting was like shooting fish in a barrel. First, the cartel apologises to the nation. Second, it pays tribute to its wonderful staff. Third, it says sorry to its depositors. Next, it sympathises with its long-suffering shareholders. Then, it grovels with gratitude to the Irish Government for its support.
Finally, it thanks its customers for their “loyalty”.
After the ritual hand-wringing, members of the cartel immediately screw the customers again. At the same time they raise their top dogs’ pay . Then they apologise again…
Apologies from bankers are two a penny. Apologies cost nothing. They leap off their lips as easily as share options swell their current accounts.
Apologies have been pouring out of the mouths of bankers called before the Banking Enquiry. They are par for the course at annual general meetings. After prostrating themselves in fake humility, they return to gouging their customers. A bit like committing adultery a few hours after leaving the confessional.
Apologies have become the bankers first line of defence. So last week it was astonishing to find myself on the receiving end of a banker – not giving, but demanding an apology.
Richard Pym, the new chairman of AIB, tried to be all chummy with the shareholders at the bank’s AGM on Tuesday.
Down in Bank Centre in Ballsbridge, gone were the old partitions, keeping scruffy shareholders away from mixing it with mohair-suited directors. (The familiar heavies were kept in the background.)
Pym allowed the unwashed to approach him at the podium and even engaged them in conversation. Afterwards he was seen slumming it with the mob – sharing sausages and chips
Of course he has little in common with the sausage and chips brigade. Unlike his lowly luncheon companions, he is cute enough not to have bought a single AIB share – despite his vast stipend. Pym the Pauper is a plutocrat posing as a man of the people.
After the mandatory apology for the bad behaviour of AIB, he became pretty shirty when I pointed out that he himself had managed to pull a mighty stroke.
Pym, oozing sympathy for the suffering masses in the hall, is drawing €365,000 a year for being so good as to take the chair at AIB. He is earning €90,000 more than his predecessor. The pay packet for the occupant of the AIB chair has rocketed by 33pc.
After I had accused Pym of “milking” the bank, he responded that my remarks were “very offensive”, sought an apology and boasted to the meeting that he could have earned far more than €1,000 a day if he so wished.
“I am not here for the money,” he responded scornfully. “And there are many things that I could do that would make more money,” he declared with staggering hubris.
I am afraid I will not be able to accommodate Mr Pym. Apologies may be cheap, but ought to be sincere.
Humility was hardly the Pauper’s most convincing characteristic. He need not have worried. It was unnecessary. As predicted, AIB’s 99.8pc shareholder, Minister for Finance Michael Noonan – acting on behalf of the Irish people – had given Pym’s soaring salary a ringing endorsement.
Thanks to Noonan, every resolution was passed by 100pc to nothing! North Korean President Kim Jong-un will be green with envy when he hears about the free and fair elections at Ireland’s AIB, following the meeting of minds between Noonan and the sensitive souls in AIB.
The cartel is safe. AIB may opt to make the odd gesture, as it did on Friday morning. But – courtesy of the minister – Pym the Pauper and his sidekick, AIB chief David Duffy are firmly in the saddle.
Having beaten their breasts and made a minor reduction, AIB are now free to fleece standard variable rate borrowers. AIB’s grand reduction of 0.25pc is a pittance. The typical borrower with a 25-year mortgage of €200,000 will save a paltry 90c a day.
Duffy had been dodging the variable mortgage question of late. Ten days ago he promised to keep it under “review”, dismissing critics as “simplistic” when linking the variable rate purely to the cost of funds to the bank. There were other significant factors outside the cost of borrowing from the ECB… blah, blah, blah.
At the AGM, Pym the Pauper parroted Duffy the Dodger’s nonsense. A cut in AIB’s standard variable would be “considered”.
Forget the palaver surrounding Friday’s dawn announcement. This weekend it is still just below 4pc. The average standard variable rate in Europe comes in at 2.47pc – half of AIB’s level.
In Ireland, standard variable victims are still being plundered by all the big lenders. Together.
Pym the Pauper and Duffy the Dodger at AIB on Tuesday were playing a more nuanced game than Boucher the Butcher did on Wednesday at the Bank of Ireland AGM.
Richie Boucher was having none of that “review” stuff. He gave no quarter. “It would be inappropriate for me to make a commitment,” he said.
Bank of Ireland’s rates are set to stay above 4pc. The two big banks see eye-to-eye on this one.
And so does the third culprit, Ulster Bank. On Wednesday afternoon Ulster’s boss, Jim Brown, told TDs and Senators that his bank’s standard rate variables would remain at their current sky-high 4.5pc levels.
The three mortgage lenders were singing from the same hymn sheet. The fourth, Permanent TSB, has already committed to 4.5pc standard variables.
AIB, Bank of Ireland, Ulster and Permanent TSB have simultaneously decided to gouge their customers with penal rates. No one is moving much out of line. If it looks like a cartel…
There is no competition in the banking market. AIB, Ulster and Bank of Ireland are back declaring profits. How much of this surplus is due to the crucifixion of their customers? A crucifixion carried out with the consent of the Government.
Macho Michael has been throwing shapes in the direction of the cartel in recent weeks, announcing that he will be “calling the bankers in” for a dressing down. Other Cabinet ministers have been hinting at an increase in the bank levy. The bankers will call their bluff.
The cartel has spotted the weakness in the Government’s position. If Noonan forces AIB to slash standard variables more dramatically, the bank will lose hundreds of millions in soft profits. His plans for privatisation will be in tatters. Potential investors will vanish. AIB will be worth less.
If the minister is seen to be too interventionist, forcing the four banks to stop beating up their customers, he will scare off foreign competitors arriving to break the cartel.
No overseas rival contemplating a foothold in today’s Irish banking market will take the plunge if it sees an Irish financial sector controlled by the State.
If he does not smash the cartel, he could lose the general election. Borrowers could take their revenge.
Quite a quandary for the minister. Last week he bottled it when he missed a heaven-sent opportunity to put the skids under the banks.
Noonan rubber stamped all the directors’ reappointments in AIB and Bank of Ireland, together with their remuneration. He voted for Boucher the Butcher’s €843,000 pay package. He voted for Pym and Duffy, for the extraordinary €490,000 pay deal for B of I’s part-time chairman, Archibald Kane. He gave the unacceptable activities of both banks a clean bill of health.
He could have eyeballed Duffy, Pym, Boucher and Kane before the AGMs. Instead, he blinked before the battle began. AIB responded with a public relations gimmick.
In the coming days the minister is set to confront the cartel. My money is on the cartel.
Pages: 1 2