Banks’ profit obsession led to decline in ethics, says official

THE obsession of banks with profits has led to an alarming decline in ethics in the financial sector, it was claimed yesterday.

The Irish Bank Officials’ Association (IBOA) also accused the banks of operating a climate of fear which has led to increased stress levels among staff.

In a written submission to the Joint Oireachtas Committee on Finance, IBOA said the culture of profit was driven from the top and it had displaced the values of serving customers and playing a role in communities.

“This is an alien culture that should have no place in Irish banking. Profit comes before service and the customer, before ethics and the highest standards and profit comes before the welfare of staff,” Larry Broderick, general secretary, told the committee.

Mr Broderick said the shift in the culture came when pay was linked to individual performance.

Since then the banks have become more obsessed with profits, to the detriment of their staff, their customers and the communities they serve, said Mr Broderick.

“The rot set in the late 1980s or early 1990s. That was the turning point that has brought us to the current banking crisis,” he said.

At present AIB is undergoing four separate investigations including overcharging thousands of customers on foreign exchange deals. The operation of illegal Virgin Islands Faldor accounts set up for the benefit of former top AIB senior executives is also under investigation.

Those scandals “have rocked our members’ confidence in their own bank, to which they are tremendously loyal” said Mr Broderick.

Their payback has been a 20-fold increase in stress levels in the past five years and being regarded with suspicion by those they are committed to serving, he said.

Mr Broderick said it was clear from the disclosures about Faldor and from the various other issues now coming into the public domain about AIB, there was “a serious breach of the highest ethical standards”.

Prior to the taking of the submission, members of the committee tackled the question of compelling senior AIB management to appear before the committee.

AIB was accused of giving the committee “the two fingers” by Labour’s Joan Burton.

Her attempt to get the committee to pass a motion compelling AIB got mixed support and was strongly resisted by Richard Bruton, Fine Gael and the chairman of the committee.

Mr Bruton argued that “there was no point in having a watch dog like IFSRA and barking yourself”.

But Ms Burton was insistent that the investigations by IFSRA, the Revenue Commissioners and others into the goings-on in the bank would not be compromised if AIB was compelled to appear.