Investors wary of ‘noisy’ bank debates
AIB chief executive Bernard Byrne said he regularly reassures the group’s investors about Ireland’s “noisy environment” in relation to political debate around the banking sector.
He described this heightened debate and public scrutiny as a “good thing”.
Addressing an Oireachtas Finance Committee yesterday, Mr Byrne said fund managers pose this question to him “all the time” and claimed “Ireland is a noisier environment than investors are used to because it is… a smaller country… and we talk about everything quite openly”.
Over the past year a wave of proposed reforms have included draft legislation aimed at keeping distressed borrowers in their homes, attempts to curb so-called vulture funds, which continue to snap up non-performing loans, and proposals to strip banks’ ability to use historic losses to reduce tax bills.
AIB’s unsuccessful campaign to reintroduce bonuses for its top bankers also caused a storm of controversy earlier this year but the proposal received near universal support from its investors.
Mr Byrne said investors look across “big universes” and “they go ‘that is very noisy’ and they hear things, so I end up responding a lot to the question about what is going on…so that is how I describe it.”
Asked whether senior managers in banks should be subject to tighter legislation, and potentially face a greater likelihood of a jail term if found guilty of malpractice, he joked, “I don’t think anyone’s sole objective in life is to jail bankers”.
However he said “balance needs to be factored” into the debate about restrictions on banks, and said that if the environment is more prescriptive, regulated organisations will struggle to be “agile” and “nimble” in competition against fintech (financial technology) firms.