Central Bank of Ireland<\/a> figures show.<\/p>\nBut while average households\u2019 wealth has grown by 8 per cent a year over the past 11 years, faster than any other country in Europe, they remain significantly underinvested in traditional financial investments, at only 5.5 per cent of total assets, according to a report published last year by Fordel, a high-net-worth wealth management firm.<\/p>\n
Meanwhile, some \u20ac295 billion in wealth accumulated by \u201cretired households\u201d in the State is set to be transferred to family and others over the next couple of decades, Goodbody estimated in a report last year.<\/p>\n
\u201cIreland is a relatively young country and, for the first time, we are seeing, on a grand scale, intergenerational wealth occurring,\u201d O\u2019Grady says. <\/p>\n
But it\u2019s the mass affluent market that is seen as the biggest prize for the bank and rival AIB, which is further behind the curve. <\/p>\n
\u201cWe\u2019ve got two and a half million retail customers in Ireland, comfortably. About 150,000 of those fit, from a data perspective, the profile of customers who will be amenable to a wealth offering,\u201d he says. \u201cWe\u2019re making those connections, those referrals, and it\u2019s for that reason that we expect AUM to have exponential growth.\u201d<\/p>\n
Bank of Ireland expects its fee income to grow by 7 per cent a year out to 2028 \u2013 more than twice the pace of the Irish economy. <\/p>\n
Meanwhile, Minister for Finance Simon Harris confirmed on Tuesday that the Government plans to introduce a tax-efficient savings scheme to encourage people to invest some of their money. The final details will be in the budget.<\/p>\n
Not surprisingly, the bank is \u201cvery supportive\u201d of the initiative, which is in line with a broader European Commission push for member states to roll out consumer-friendly savings accounts. <\/p>\n
\u201cI think a version of an [individual savings account] is a no-regrets decision and a no-regrets product and service to get into the market,\u201d O\u2019Grady says. <\/p>\n
O\u2019Grady has been emboldened in setting a second strategy update by the bank having consistently beaten key financial targets set in the previous plan. These include goals for underlying return on tangible equity, a key measure of profitability, and keeping running costs below 50 per cent of income. However, much of this performance was driven by a sharp rise in global interest rates, as central banks increased borrowing costs to combat surging inflation.<\/p>\n
At one stage, in early 2024, Bank of Ireland had \u20ac28 billion of surplus cash stashed away with the Central Bank of Ireland, earning the European Central Bank\u2019s (ECB) then 4 per cent deposit rate. While the bank only passed on a portion of ECB rate hikes to mortgage borrowers during the period of rates tightening, it benefitted enormously as customers kept most of their money in current and on-demand deposit accounts earning little or nothing, even as the banks offered headline savings rates for certain deposit accounts of up to 3 per cent. <\/p>\n
The bank has also generated significant profits by investing surplus deposits in long-term bonds \u2013 or what is known in banking jargon as a structural hedge. This has helped ease the impact of a sharp pullback in ECB rates since mid-2024. <\/p>\n
Bank of Ireland has paid and committed to returning a total of \u20ac3.6 billion to shareholders by way of dividends and share buybacks over the past three years. While O\u2019Grady forecasts that the bank will generate a further \u20ac3.7 billion of net capital over the next three years, RBC Capital analyst Benjamin Toms, for one, estimates it will return \u20ac4.6 billion of surplus money to shareholders for the period, as the bank also lowers its existing surplus reserves. <\/p>\n
Banking career<\/p>\n
Raised in the south Dublin suburb of Booterstown, O\u2019Grady began his career in 1990 as an accountant in AIB\u2019s financial control unit before moving to London in 1995 to join Dresdner Kleinwort Benson. In 1999, he moved to Citibank in the UK, where he worked on relocating operations to lower-cost centres, with Dublin\u2019s IFSC benefiting significantly.<\/p>\n
He returned to Ireland in 2002 as head of finance at Bord G\u00e1is Energy and rejoined AIB in 2006, just as early signs of the banking crisis began to emerge. From 2013, he served as director of finance and investor relations, helping guide AIB back to profitability and through its 2017 initial public offering. <\/p>\n
O\u2019Grady\u2019s ventures outside of banking have been short-lived. Having left AIB in 2018 to join housebuilder DRes ahead of a planned flotation that was later shelved due to market turbulence, he was subsequently lured into Bank of Ireland in 2019 and quickly rose to the position of chief financial officer. <\/p>\n
After briefly leaving the bank in 2022 to join Musgrave Group, the food wholesaler and retailer, he was back with the bank by the end of the year, as CEO, after McDonagh exited to become a turnaround senior executive with Credit Suisse. <\/p>\n
Motor finance debacle<\/p>\n
O\u2019Grady may have been away when the bank was hit by a record \u20ac100.5 million Central Bank fine for its role in the State\u2019s tracker mortgage scandal. But he\u2019s found himself having to deal with another customer debacle. <\/p>\n
The bank\u2019s UK motor finance unit became embroiled in early 2024 in an industry-wide Financial Conduct Authority (FCA) investigation into the use of discretionary commission arrangements between car dealers and lenders. Following the hearing of test cases that went all the way to the supreme court in London last year, the FCA signed off on the final details of a customer redress scheme on Monday. <\/p>\n
Bank of Ireland, which has a 2 per cent share of the UK motor loans market, had set aside \u20ac429 million by the end of last year for customer compensation and related costs. It eclipses the \u20ac340 million costs the bank stomached for its role in the tracker mortgage scandal \u2013 the biggest overcharging affair in Irish banking history. <\/p>\n
Analysts, including Denis McGoldrick at Goodbody Stockbrokers, reckon that the bank\u2019s UK provision is adequate \u2013 and may even prove to be too much \u2013 after the FCA lowered its estimated cost of the industry compensation scheme by 17 per cent to \u00a39.1 billion (\u20ac10.5 billion). There is a high likelihood that the FCA scheme will be challenged in the courts. <\/p>\n
The bank said in a statement on Tuesday that it was \u201cassessing the potential financial impact of the final scheme and is committed to achieving a fair outcome for customers, ensuring appropriate redress is provided where loss has occurred\u201d.<\/p>\n
US withdrawal<\/p>\n
O\u2019Grady insists that the bank\u2019s decision in February to pull out of its US leveraged acquisitions finance business and close its New York office \u2013 where it has had a presence for 50 years, save for a brief period in the late 1990s \u2013 and two other US locations was not a kneejerk one. The loan portfolio stood at \u20ac2.5 billion a few years ago, but had declined to \u20ac1.2 billion by the end of last year. It will be wound down over three years. <\/p>\n
\u201cThat business model has changed. These deals are typically syndicated deals with a number of parties involved, and what we experienced over the last number of years was a shift in risk appetite that we were not comfortable with,\u201d he says. \u201cWe will run that book down in an orderly way over the next three years.\u201d<\/p>\n
This has been driven by more private credit funds \u2013 rather than banks \u2013 participating in the leveraged acquisition finance market. A number of US credit funds have run into issues in the past six months, hit by a spike in loan defaults, collateral markdowns and a spike in investors looking to exit. <\/p>\n
O\u2019Grady said the group is happy to continue in the European leverage acquisition finance (LAF) market, which is dominated by banks and offers greater opportunities to generate fees. The bank\u2019s European LAF book stood at \u20ac2.8 billion in December. <\/p>\n
Technology spend<\/p>\n
Bank of Ireland invested \u20ac1.6 billion over the past three years mainly on developing its information technology It covered things like modernising its core platforms, investing in cyber and fraud protection, building a new business lending platform, and developing a new mobile phone app, which is currently being tested with \u201cfriends and family\u201d and is on course to be launched by the end of June, according to O\u2019Grady. <\/p>\n
\u201cWe will invest about the same over the next three years,\u201d he says, adding that areas of focus will include the group\u2019s wealth business and Northern Ireland operations, as well as greater use of artificial intelligence. <\/p>\n
O\u2019Grady is keeping a close eye on activity on the new Zippay payments service launched last month by the three domestic banks as they seek to take on Revolut, the market leader in this space. <\/p>\n
\u201cMy objective is to ensure high engagement from our customers that results in the greater quantum of balance of staying within Bank of Ireland,\u201d he says. \u201cWe\u2019ll certainly be keeping a very close eye on the data over the next few months.\u201d <\/p>\n
Asked whether he\u2019s concerned about Revolut\u2019s plans to enter the Irish mortgage market, where Bank of Ireland is the main player with a 40 per cent share, O\u2019Grady insists he\u2019s \u201cvery comfortable\u201d about the group\u2019s ability to compete. <\/p>\n
\u201cWe came out of the last strategic cycle with a very strong franchise, whether that\u2019s in mortgages, current and deposit accounts, or the wealth business. My objective is to ensure that we deepen and expand that franchise. And I\u2019m very confident that we can do that. But we\u2019re certainly not complacent.\u201d<\/p>\n
CV<\/p>\n
Name: Myles O\u2019Grady.<\/p>\n
Job: Bank of Ireland chief executive.<\/p>\n
Family: Married to Rupee and their son\u2019s name is Rian.<\/p>\n
Hobbies: Time with family and friends, watching Rian play a range of sports. Reading, gym, and swimming.<\/p>\n
Something we might expect: He\u2019s just back from an investor roadshow, meeting about two-thirds of their shareholder register to discuss the strategy update.<\/p>\n
Something that might surprise: He has been trying to learn Punjabi for years, as Rupee\u2019s family is originally from India.<\/p>\n","protected":false},"excerpt":{"rendered":"Myles O\u2019Grady is taking another run at a target that defeated his two predecessors. The Bank of Ireland…\n","protected":false},"author":2,"featured_media":379651,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[7715,7863,72,61,60,90277,8581,70],"class_list":{"0":"post-379650","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business","8":"tag-aib","9":"tag-bank-of-ireland","10":"tag-business","11":"tag-ie","12":"tag-ireland","13":"tag-myles-o-grady","14":"tag-revolut","15":"tag-simon-harris"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/379650","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/comments?post=379650"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/379650\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media\/379651"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media?parent=379650"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/categories?post=379650"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/tags?post=379650"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}