No sackings of NIB's branch managers, says boss
Branch managers who allowed the overcharging of customers will not be dismissed from National Irish Bank, its chief executive said today.
Don Price said the report by the High Court inspectors had found the 135 branch managers could not be held responsible for overcharging and other illegal practices such as setting up fictitious account.
“What they’ve concluded in the report is that responsibility lies at a more senior level in the bank. And we’re respecting that.”
He said less than 10 of the people concerned were still working with the bank as branch managers.
“We’ve a completely new management team in place. Over the last six years, we have been working to transform the bank and NIB is now a very different organisation.”
Mr Price confirmed that the 19 NIB officials who were the subject of adverse findings in the report were no longer working at the bank.
“We’re not going to comment on individuals because the report has been referred to the Director of Public Prosecutions and we don’t want to say anything that would prejudice that,” he said.
But Mr Price condemned the illegal practices identified by the report as “totally unacceptable”.
He said NIB did not have the necessary controls in place when it was going through major growth.
“We acknowledge we have failed our customers in the past and deeply regret the problems we have caused. We apologise to everyone who has been affected.”
Mr Price described the publication of the report as a sad day for the bank.
“But on the other hand, it’s behind us now. The key thing is that we’ve managed to wade through this.”
NIB refunded €1.9m to customers in 1998 and 1999 in response to the initial media allegations at that time.
The overcharging was done manually by bank staff, who loaded on the charges without customers’ knowledge. Some told the inspectors they had done it to “troublesome customers” who took up too much of their time.
Mr Price explained that a further reimbursement programme, expected to cost €10.6m, is now being rolled out in response to the more general findings of the inspectors’ report.
“Under the first phase of this programme, some 43,000 customers will receive automatic refunds of all manual amendments of €13 and less,” he said.
“All customer accounts in practice by higher value amendments will be reviewed and customers refunded where necessary.”
The bank has already paid €10.8m to investors who were encouraged by bank staff to put ‘hot money’ in offshore investment schemes in the Isle of Man.
NIB’s final bill, which includes the cost of report, will be at least €64m.
But Mr Price admitted the actual cost to the bank was far higher.
“Particularly in the early years (of the scandal), there was enormous opportunity cost. We didn’t really enjoy the boom years here at the end of the 90s and into 2001. For a number of years we were very much internally focused, transforming this organisation, refunding customers and dealing with the Revenue and the Inspectors.”
NIB chief operating officer Joe Trethowan added: “We have not lost any appreciable amount of customers. But while everyone else was enjoying the Celtic Tiger, we had to rebuild the bank.”
NIB, which has a market share of 3% and around 200,000 account holders, is owned by the National Australia Bank.
Mr Price said he was not aware of plans by the parent company to sell its Irish subsidiary in the wake of the report.
“We’ve had that speculation for at least six years now. Any decisions on the future of the bank here will be taken down in Australia. The focus for us locally is to get this bank into the best shape we can and that’s what we continue to do.”
He added: “What we’ve been saying to our staff is that we can’t go on looking over our shoulder, wondering if we’ve been sold or not.”
In the wake of the scandal, NIB introduced ethics programs, a whistleblowers helpline and a listening forum for its 700 staff.
Mr Price said it would take time for NIB, and the banking sector in general, to regain the trust of customers.
“The industry is going through a difficult period at the moment. It takes a long time to regain confidence. The sooner we can get through this sort of retrospection, the better for all of us,” he said.
