BUSINESS OPINION: The bank has forgotten its debt to the taxpayer. It's almost like the crisis never happened

RICHIE BOUCHER has gone from best boy in the Irish banker class to problem child in the space of six months.

He may have been somewhat less niggardly in passing on the most recent European Central Bank interest rate cut than he was with the first, but the damage is done in the eyes of politicians and the public.

It’s some fall from grace. The Bank of Ireland chief executive’s pragmatic and co-operative attitude to Nama and the wider plan to save the banking sector was in marked contrast to his peers. He may have started from a better place – nationalisation was not as inevitable a consequence of the plan for Bank of Ireland as it was for the banks – but he deserved the plaudits he got for rolling up his sleeves and getting stuck in.

Things seemed to change in the middle of the year when the bank and the Government managed to attract in a group of North American investors. This lifted the spectre of majority State ownership and with one bound our hero was free.

Boucher, it would seem, took the view that he was once again answerable only to his institutional shareholders. And in fairness, the Government may have played along with this notion as it had an interest in seeing the North Americans’ vote of confidence in the Irish economy reciprocated.

In doing so, the Government may have put too much store by the political nous exhibited by Boucher in his dealings with them up to that point.

But the penny seems to have dropped last month when the ECB cut interest rates and Bank of Ireland refused flatly to pass it on despite a direct request from the Taoiseach.

It was the most obvious manifestation of a general shift of attitude at the bank which had been under way for a while and included moving commercial customers off euribor and on to a rate that was closer to the cost of funds to the bank.

Taken in isolation, these were correct decisions for a bank to make in the interest of shareholders.

The best way – arguably the only way – to protect their investment and return the bank to profitability is to rebuild the balance sheet by widening margins. It is also the quickest route to big paydays for the senior management.

The problem, of course, is that these decisions cannot be seen in isolation and the legitimacy of the stance being adopted by the bank is very much open to question as it appears to deny everything that went before and ignore its continued dependence on the Government’s guarantee for its survival.

Leaving aside for a moment the issue of the debt the bank owes taxpayers, the ease with which Bank of Ireland has slipped back into its old culture is worrying and yet not surprising.

Bank of Ireland was manifestly the least worst offender of the Irish banks but it still managed to bankrupt itself in a spectacular fashion due in no small part to management failure, short-sightedness, greed, call it what you will.

It would be nice to think that four years and billions of taxpayers’ euro later, the bank had learnt from its mistakes and changed its culture. Or that the Government had done it for them.

But of course it has not. More than with any other Irish banks, the same individuals remain in charge at Bank of Ireland.

Des Crowley (head of the bank’s Irish and UK retail operations) and Denis Donovan (head of capital markets) and the managers of many of Bank of Ireland’s major divisions predate the crisis.

After a fashion, it was their reward for having only cost the State single-digit billions rather than the double-digit figures notched up by their peers.

It is rather futile to rail against the injustice or otherwise of all this. The picture is the same everywhere.

Governments around the world have made little headway trying to reform banking or bankers. There is some circumspection about bonuses and pay but the response to the catastrophe of 2008 boils down to little more than making sure the banks put more money aside for the next time greed gets the better of them.

By this yardstick, singling out Boucher because he wants to make lots of money for his shareholders and himself rather than help struggling variable mortgage holders is unfair. It is tantamount to punishing him for being good at his job as defined by the norms of his industry.

The role of the Government in this rather bleak scenario is also pretty much what it has always been – to try and keep the worst tendencies of the industry in check. It does – certainly in Ireland – have a somewhat bigger armoury and better calibre of regulator this time round.

Over the next few weeks, the Financial Regulator, Mathew Elderfield, must decide whether or not Boucher should be subject to a detailed investigation to see if he passes the fitness and probity test that will apply to all senior bank executives from January.

The test looks at their performance in the run-up to the crisis, and executives who don’t pass muster can be removed.