BoI chairman backs board after shareholder criticism

BANK of Ireland chairman Pat Molloy has strongly defended the company’s board of directors in the face of shareholder criticism but has admitted to bad management practices by the company’s former leadership.

Addressing shareholders at the bank’s extraordinary general meeting at UCD yesterday, Mr Molloy – BoI’s former chief executive, who returned as chairman last year – said that the bank, as well as other Irish banks, had taken “an overly optimistic view” of the country’s future economic prospects.

He said the bank had entered the recession “over-leveraged, with too much reliance on international wholesale funding and were over-exposed to the property markets”.

“These circumstances, which have had such an adverse impact on our stockholders, are very much regretted,” he added.

While much of BoI construction industry lending came under the management of former chief executive Brian Goggin and former chairman Richard Burrows, much of the bank’s board remains unchanged.

This is something that did not go unnoticed by shareholders yesterday, with one describing Mr Molloy as the company’s “only hope”.

One shareholder at yesterday’s meeting said that they had “no confidence in this management team” and that “a new dynamic management team is needed”. They asked for a justification of the “outrageous” lending in the boom years of the so-called Celtic Tiger era.

The no confidence line was echoed by other shareholders, with one calling for a new chief executive and a new chief accountant, effectively looking for the heads of chief executive Richie Boucher and chief financial officer John O’Donovan.

Responding to the criticism, Mr Molloy said that the bank’s current management team would be judged by its progress and performance.

“This team has performed extraordinarily well,” he added in relation to the company’s current management set-up.

Even with its ambitious capital restructuring plan unanimously approved by shareholders, earlier in the day, Bank of Ireland could not avoid some of the fallout from a bad day for the ISEQ index of Irish shares.

A near 4% fall, to below the 3,000 point mark, for the ISEQ, dragged many of the country’s stocks down. For its part, Bank of Ireland showed some recovery in the afternoon, but still ended the day down by 1.75%, or 3 cent, at €1.40.

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