Boucher may yet prove investors were right to keep faith with him
This may seem ironic given that one year ago Mr Boucher became a lightning rod for widespread grievance about the banking sector following a poor showing before the Oireachtas Public Accounts Committee.
He is one of the few remaining senior executives from the days before the state guarantee of the banks in Sept 2008.
Despite considerable public opprobrium and political pressure, Mr Boucher has retained the top position in the most viable of the domestic banks.
He has done so on the insistence of the bank’s investors, Wilbur Ross and Kennedy Wilson. When they bought a chunk of the bank in 2011 the main proviso was that he stayed in situ. To this end, it looks as if their faith in him will be vindicated.
Barring a catastrophe, Bank of Ireland will be the first of the covered banks to fully exit state ownership.
The Government still holds 15% of the common equity and €1.8bn in preference shares.
If the preference shares are not redeemed before next March, the Government’s stake increases by 25%.
The EU stress tests will be held in March. One view is that if the stress tests had been held for the Irish banks before the exit from the bailout programme in November, then potential investors would have a much clearer idea of their asset quality. This would then have helped Bank of Ireland attract private investment to redeem the preference shares.
Mr Boucher says the timing of the stress tests will not hinder the bank’s attempts to attract investment because it had conducted an internal capital adequacy assessment process that included a stringent stress test.
He is confident that the bank will not need fresh capital. What to do with the preference shares may be the biggest challenge in the short term, but the €17bn tracker mortgage book is the biggest challenge to profitability over the longer term.
It doesn’t look as if there will be an industry-wide solution, which means tracker mortgages will continue to be a drag on profits.
