Ms Francesca McDonagh:

The answer to the second question is "No". We did not apply for subsidies or request any Government or State support for colleagues who are full-time employees of Bank of Ireland.

To answer the Senator's first question, again, it is worthy of a broader debate. I cannot talk about Ulster Bank. Questions about Ulster Bank should be directed to it or NatWest. We have, over the years, seen smaller banks enter and then exit the market, although in some cases, they were here for a long time. It goes back to the point about being a small bank in a relatively small market such as Ireland. It is difficult with the investment in technology and branch network, fixed costs related to regulatory compliance and the cost of doing business, particularly in a low-interest rate environment with muted credit formation. It is difficult to meet minimum hurdle rates that shareholders expect. We would, therefore, see the cost of capital and expectation for investors as being approximately 10%. Our return on equity target was approximately 10%. That has been incredibly difficult in a low-interest rate environment and we were loss-making for the first half of last year. Banks not being able to achieve returns over a sustained period is not a good deployment of shareholder capital. That is the challenge.

Ireland as a place to do business is very attractive. A significant part of our economy relates to foreign direct investment, FDI. We bank two out of every three FDIs that come into Ireland. We will talk about the level of education and, obviously, the language benefit as a native English speaking country following Brexit as a differentiating factor, the relative youth of the population etc. We see a huge number of FinTech, pharmaceutical and financial services companies coming into Ireland. Ireland Inc. is, therefore, very compelling. It is one of the only economies in the world globally last year that actually grew despite the pandemic because of those international companies.

On banking specifically, the European banking model is challenged. That does not mean it is not possible to grow and support the economy, which is what we are endeavouring to do. We have invested in digital platforms. We want to grow as the country recovers. We would have grown our lending book for the last three years until we got into the pandemic. Brexit is in the rear-view mirror. There was increasing optimism around Irish businesses and households about recovery. We have a 15% increase in deposits because some people whose income has not been so impacted have been obliged to save as there is no opportunity to spend money. Some parts of the economy, therefore, will be looking to have an increase in consumption. Some people will use that for deposits for houses.

There is, therefore, cause to be optimistic but the dynamic is not a pot of gold. It is a challenging environment and that is reflected in our financials. The opportunities are also reflected in my cautious optimism about the future, however. I believe the relationship between the State and the sector needs to be revisited and normalised. I appreciate the past but our focus is firmly on supporting the future of Ireland.