Francesca McDonagh isn’t the first major banker to quit because of Ireland’s salary cap; in fact, she is the fifth to leave the country’s top two lenders in four years.
In her next job, she’ll need every ounce of the toughness she has a reputation for: she’ll be jumping ship as CEO of the Bank of Ireland for one of Europe’s most accident-prone financial institutions: Credit Suisse.
Where she helped turn around BoI, which looks likely to come out of state ownership this year, Credit Suisse has spent the last two or three years lurching from one crisis to the next, with problems ranging from a corporate espionage scandal to a costly and damaging risk management coup. -UPS.
The challenges McDonagh faced at BoI (she joined five years ago amid Ireland’s tracker mortgage loan scandal when its market capitalization was half that of rival AIB) will no doubt come in handy when she starts in October as director. of the Swiss bank. from Europe, the Middle East and Africa.
Credit Suisse chief executive Thomas Gottstein told the Financial Times that McDonagh had impressed during the hiring process with his experience and knowledge.
“He has very relevant banking and wealth management experience from his time at Bank of Ireland, and at HSBC before that. This is really a great match for us to benefit from each other’s skills.”
It’s not the first time the 47-year-old McDonagh has made a big impression. When three Oxford colleges turned away the comprehensive student, whose parents hadn’t been to college, she called them, convinced there had been a mistake. She knew she had to “hurry up a bit” to make her Oxford dream come true, she later recalled.
“I think there has been a clerical error, surely I am meant to come,” she recalled saying. Two of her still rejected her, but the third invited her to come and convince them. She did and studied philosophy, politics and economics at Greyfriars.
McDonagh was born in south London and grew up in Croydon, supporting the Crystal Palace football team and idolizing star striker Ian Wright.
She attributes her resilience to being the daughter of a refugee (her mother moved to the UK as a teenager during the Suez crisis), as well as being a woman and former public school student in established circles.
After college, it was her “passion to explore the world and just a genuine level of student debt,” she later said, that launched her into a postgraduate trainee scheme at HSBC’s investment banking division at 22. years. She stayed on the bench, often in international roles, for two decades.
Under his watch, BoI’s market capitalization has overtaken AIB’s and by the time he leaves in September, the state should have ditched its stake in the bank altogether. “She’s not going to take her foot off the gas in the coming months,” said a figure on the bench who knows her well.
A senior industry figure who asked not to be named said he has a reputation for “shouting and yelling” and being a “challenging personality” to work with.
But the person who knows her well said that was an “outdated view,” even though she had “steel in her spine.” . . She is calm in a storm. She has exacting standards.”
A lover of travel and food, she reads Nordic and detective crime novels to relax. And “anyone who knows her well knows that the way to distract her from her is by showing her pictures of dogs,” the person added.
She also enjoys getting caught up in a corporate problem. “She has great intellectual curiosity, she likes to look at problems from different angles to see how she can find a solution. She makes tough decisions — she rolls up her sleeves and gets her hands dirty,” the person added.
His decision to leave BoI has reignited criticism of pay caps at Irish banks. Having been the recipients of the eurozone’s biggest bailout more than a decade ago, they are now subject to a €500,000 cap on top executive salaries.
Although McDonagh got a cap waiver and earned €961,000 last year, he can expect to at least double his salary at Credit Suisse, based on similar roles at the bank.
“In the last four years, Ireland’s two mainstay banks, AIB and BoI, have lost two CEOs and three CFOs. In all cases, there is a common thread: remuneration”, said the main figure of the industry.
His move to Credit Suisse is reminiscent of Ralph Hamers’ move two years ago from chief executive of Dutch bank ING to the same role at another Swiss bank, UBS.
Hamers had previously been a vehement critic of bankers’ pay caps in the Netherlands, arguing that they caused a brain drain. When he joined UBS, he became one of the highest paid bankers in Europe.
Two months ago, McDonagh herself said in an interview with Ireland’s Business Post newspaper that pay restrictions in Ireland were “out of step with current realities”. The cap was fine at the time, she added. But Irish banks now had to compete for talent “with one arm tied behind their back”.
The IMF has also recommended relaxing the salary cap. In a statement Thursday at the end of a review of Ireland’s economy, he highlighted the “need for banks to retain talent” as one of the “lingering problems” of the financial crisis.
“Politically, it is very challenging to change, but it comes at a cost,” the leading industry figure said. “As long as we have restrictions, we always run the risk of Irish banks becoming a training ground for other businesses.”