There was, it has to be said, widespread, delighted rubbing of hands at the announcement that AIB was to be fined €96.7 million by the Central Bank, punishment for robbing 13,000 customers of their mortgage entitlements and costing hundreds of borrowers their homes. It was payback time. Finally, the fat cats were getting their comeuppance. Now they were going to pay the price.
Or so we thought. The glee was short-lived. It quickly wore off when we got to look inside the box.
Yes, AIB was going to have to fork out the best part of €100 million, and yes, the money would be going straight into the coffers of the exchequer. But what we overlooked was that AIB is virtually owned by the State already, so that the taking and giving was no more than a circular exercise; the Central Bank was simply taking a fat wad of cash out of the right pocket and placing it into the left pocket.
No punishment, no lashings across the back of the iniquitous bankers. It was a case of adding on one side, and taking away on the other.
When AIB was rescued from collapse in the 2008 financial crisis, it was because the State pumped in €21 billion in exchequer money, in return for which the country became 99 percent owners of the bank. That figure has since dropped to 66 percent, but the principle remains the same. The Central Bank fine, in the end, is being paid by the State (aka, you and me ), which will then receive it back with the other hand. So, no winners and – as far as the bank management is concerned – no losers either.
Unless senior bankers can be held accountable for their misdeeds, then the Central Bank ‘fine’ can be seen as nothing but window dressing. Private citizens can, quite rightly, be put behind bars for the kind of fraudulent practices that seem part of bank culture, but corporate chicanery is glossed over by way of empty gesturing meant to stop the dogs from barking, until the next time.
Bankers, in some respects, are slow learners. It is barely twenty years since AIB was caught in the scandal of the bogus, nonresident accounts, 53,000 of which were facilitated by staff and management with eyes wide open. The operation of that scam saw DIRT (Deposit Interest Retention Tax) liability of €86 million being written off and forgotten about, in return for a promise to keep its hands clean in future.
The tracker mortgage debacle bears out the belief that there exists a culture of indifference to business ethics and a (well-founded) belief that, even when exposed, the guilty will walk away unscathed.
Given all that, and the week that followed, it took some chutzpah for the lobby group for banks to call for a removal of the Government imposed cap on bankers’ pay. The lobby group’s spokesman, Brian Hayes (the erstwhile TD, senator and MEP who started his career on the left of the political spectrum), opined that it would take political courage to remove the cap. You can bet it would. The cap now stands at €500,000 salary per annum.
Mr Hayes went on to warn that the salary cap would lead to an executive talent drain. Our senior bankers could easily take their skills and expertise elsewhere, and where would that leave us?
To which several thousand battered, bruised mortgage holders, victims of the most egregious criminal deception, could be forgiven for fervently commenting – “and that might not be such a bad thing either.”