FRIDAY, MAY 4: Troubled consumer lending practices hobbled the bank before the recession. Its reputation had taken a hit and needed a leader to get it back on the right track.
Brendan McDonagh was that leader, only we’re not talking about the Bank of NT Butterfield, but HSBC North America.
Mr McDonagh was the CEO at HSBC North America and is credited by bankinvestmentconsultant.com for helping the bank to “rebound” and “move past its problems”.
Mr McDonagh was elected chairman of the board of directors at Butterfield on Tuesday and will be tasked to helping the bank rebuild its franchise.
He said: “I knew Bermuda quite reasonably well as I’ve come here for business in the past. So I had a sense as to what the island was about. I lived in the Channel Islands in the past so I have a lot of experience living in what you would call an ‘island community’.
He said what attracted him to accept the position of chairman was “Butterfield is at a critical stage and things are turning around. This is a great opportunity here to rebound the franchise and shareholder value.
“Part of rebuilding the value is to look critically at a lot of the operations where we have scale, where we don’t have scale. Do we have the opportunity to really compete in those markets and get an acceptable return from the shareholders?
“That is going to be an ongoing process as we get through each of those businesses.
“Butterfield has a great franchise in Bermuda and a great franchise in Caymans. In the historical context, I appreciate that the crisis the company went through a couple of years ago has done some damage to its brand and its reputation within the community, but this bank has been in this community for 150 years and it’s very much embedded in what goes on in the island.”
Mr McDonagh said there was no doubt people felt let down by Butterfield as it suffered six figure losses a few years back.
“People were obviously disappointed — both shareholders and others — by what happened to the company. We believe that’s behind us now. We have some very strong shareholders who have put their money in.
“The bank is well-stablized. The bank has had five consecutive quarters of profitability. It will take some people a longer time than others to reaffirm their confidence.
“All we can do with the management team, is keep working away at the strategy. There isn’t a set date where we can say we’re going to be back to historical levels of confidence and regard.
“Our customers have been very loyal. They have stayed with us and we appreciate that. That’s the essence of community banking.”
Mr McDonagh said that experience has taught him that it can be done here in Bermuda with Butterfield.
“You have to believe that you can restore a franchise to its value. If you don’t believe in the strategy, people will ultimately sense that.
“I didn’t take this job if I didn’t think I could do it.”
He said a rise in interest rates would greatly aid the bottom line but the bank could not afford to sit and wait for that to happen.
He said Butterfield will be examining whether or not it is doing various operations efficiently.
“Can we improve the customer experience? So we have to look at ways to streamline some of our processes. How many forms does it take to open an account? How long is the process? If you can improve technology to do that, then we can make it more efficient.”
• In accordance with Media Council regulations on transparency, Don Burgess is a shareholder in the Bank of Butterfield.