Francesca McDonagh, the incoming Bank of Ireland chief executive, is proud to have brought the “onesie” to banking.
Executives on the 234-year-old bank’s executive committee can relax. She’s not going to insist they wear all-in-one fleece suits beloved by TV box-set binge watchers to meetings. The “onesie” is the internal name she put on the one-day mortgage approval service introduced during her time at HSBC in the UK.
Still, senior management at Ireland’s largest bank may have other reasons to be concerned. The 42-year-old English native, who joined banking giant HSBC on a graduate trainee programme two decades ago, has made no secret of her desire for gender equality at the top.
Specifically, she has spoken about being shocked at finding herself as the only woman in the room in the world of finance.
As it stands, just one woman – head of human resources Julie Sharp – sits on the 11-strong group executive committee at Bank of Ireland.
McDonagh succeeds Richie Boucher (58), the last standing chief executive of an Irish bank who was in situ before the State’s snap guarantee of the industry in 2008, which led to a gross €64 billion bailout for the sector.
“I just assumed when I was 21 or 22 that when I was in my 40s it would have changed,” she said in an interview last year. “I found it quite shocking that it hasn’t changed really and that representation and proportion of women at the most senior levels in the industry remains quite poor.”
While McDonagh has said she doesn’t subscribe to the view that the global financial crisis might not have happened if there had been more women at the helm of major banks during the heady days, as one of the most influential women in British banking in recent years she has been at the forefront of the gender equality agenda.
At HSBC, where McDonagh has been head of retail banking and wealth management for the UK and Europe since 2014, she has been the face of a project to have 50/50 gender parity at senior management level in the company’s new UK head office in Birmingham by 2020.
McDonagh’s surprise selection as Bank of Ireland’s next boss comes three months after HSBC named Ian Stuart, a veteran banker it had lured from Barclays in 2014, as the first chief executive of HSBC UK, a business being ring-fenced under rules aimed at avoiding a repeat of 2008. She had been tipped in some quarters to land that job.
The subsequent Bank of Ireland selection process saw her come up against at least two internal candidates – Liam McLoughlin, head of retail banking in Ireland; and chief financial officer Andrew Keating. Both men sit on the executive committee and were the favourites to succeed Boucher, according to Paddy Power odds, to take up the role.
However, the clearest indication that Bank of Ireland was seriously considering an external appointment came last month when the Minister for Finance, Michael Noonan, who holds a 14 per cent stake in the bank on behalf of taxpayers, publicly gave the group the nod to breach a €500,000 State-imposed pay cap “if they appoint somebody significant from outside”.
The Minister confirmed on Wednesday that McDonagh will enjoy the same level of remuneration as Boucher, who received a total package of €958,000 last year.
McDonagh, whose paternal grandfather comes from the village of Carraroe in Co Galway and paternal grandmother hails from Dublin, went to Coloma Comprehensive Girls’ School in Croydon in London before studying politics, philosophy and economics at Oxford University.
Her rise through the ranks over the past past 20 years with HSBC has seen her work in seven countries, with stints in places including Hong Kong, Dubai, Mexico and Indonesia. In her current role at HSBC, she is responsible for retail offerings across HSBC plc, M&S Bank and First Direct.
McDonagh has also served as deputy chair of the British Bankers’ Association and was selected by the World Economic Forum three years ago as one of the top 200 young global leaders under 40.
Her appointment comes at a time when Irish banks, which have spent most of the past decade shrinking the size of their balance sheets, find themselves trying to rebuild their loan books and grow earnings.
“We see this multiyear de-gearing period approaching an end in the coming quarters and would see a positive inflection point in Bank of Ireland’s balance sheet in 2017,” said Stephen Hall, an analyst with Cantor Fitzgerald in Dublin.
Bank of Ireland, with two-fifths of its loan book in the UK, has the additional challenge of being the State’s lender most directly exposed to the fallout from Brexit. Following years of underinvestment in technology, the bank is the middle of a €500 million programme to modernise its IT infrastructure.
“Ms McDonagh is a very credible candidate,” said Eamonn Hughes, an analyst with Goodbody Stockbrokers. “Whilst running a business that is larger than Bank of Ireland’s current balance sheet, more noteworthy is her digital background and organisational redesign experience [which is] important against the background of BoI’s massive digital and core banking investment.
“In addition, her current wealth management mandate may also help BoI. She will clearly arrive in Dublin with fresh ideas on how to shake up the market here (and the organisation), particularly given BoI’s drifting mortgage market share in recent quarters,” he said.
While Boucher has previously said the bank has deliberately kept its standard variable mortgage rates (SVR) high – as rivals cut their rates in recent years – in order to encourage them to switch to the bank’s fixed-rate products, Hughes suggested that the new chief executive may review the bank’s SVR strategy.
And although Bank of Ireland has sought to differentiate itself from AIB, Ulster Bank and others by not engaging in a wholesale cull of its branch network in the Republic following the crisis, McDonagh has had no such qualms at HSBC.
In February, HSBC, which has closed 321 UK branches, or a quarter of its network, over the past two years, unveiled plans to cut another 62 locations. McDonagh defended the plan, saying that more than 90 per cent of its customer interactions are now taking place through HSBC’s digital channels.
Shares in Bank of Ireland fell by as much as 4 per cent on Thursday as investors pondered the appointment.
Three years after AIB and Ulster Bank started to free up money previously set aside to cover bad loans, Bank of Ireland continues to set aside net provisions for soured loans. Her arrival may prompt the bank to take more upfront provisions, which would dent profits, according to some analysts.
With the new chief executive set to take up her office on Mespil Road in Dublin 4 in October, it will be next February, when the bank reports full-year results, before McDonagh gets a real chance to outline her vision for the country’s only bailed-out bank to avoid State control during the crisis.