Patrick Honohan: Financial sector developments and architecture in
Ireland - a constantly changing landscape
Address by Mr Patrick Honohan, Governor of the Central Bank of Ireland, at the launch of the
book "Bank architecture in Dublin - a history to c 1940" by Dr Michael O'Neill, Dublin,
7 February 2012.
* * *
Bank buildings in the 19th and 20th Centuries were everywhere designed to project
confidence. As Michael O'Neill observes in this delightful book, the grand bank buildings
which represent such an important component of Victorian Dublin were establishments "built
as statements of intent...like churches, they suggest permanence, stability, longevity".
It is easy of course to make the contrast between the solid designs and structures of the
older buildings with the more recent business models of their occupants. We all know which
has proven more firm and has stood the test of time better.
Consider the austere approach of the Bank of Ireland - the central bank of its day - in its
early years in the 1800s. Apparently there were problems of punctuality, even among the
Directors. According to another classic Irish book on banking in the past, F.G. Hall's 1949
history of that bank (cited by Michael not least for its nice architectural chapter on the
Parliament House across from us here in Foster Place), the Directors were fined 1s 1d for
being 15 minutes late for a meeting; the Governor was fined 2s 81⁄2d. The fine increased with
the degree of lateness. And, in contrast to the trusting ways of latterday bankers, each
Director was required to deposit 5 Guineas in advance from which the fines would be
deducted. I wonder how many here can guess why such an odd amount as 2s 81⁄2d? (Almost
certainly it reflects the exchange rate of the time: 13 Irish pence equalled 12 English pence,
so an English half-crown would meet the fine).
It's easy to be nostalgic about the past but in reality, whatever about the buildings they
occupied, financial institutions were probably no more popular then than they are now.
Victorian banks were conservative and mostly profitable. They generally charged more for
borrowing in Ireland than the British banks, and seem to have upped the spread shortly after
Independence, just to be on the safe side, I suppose. Over time they tended to collect more
by way of deposits than they used in lending. The surplus was placed in the London money
market. Times have changed.
As Michael reminds us in this book, the industrial structure of banking was very stable in
Ireland for a century or more. With the shift towards joint stock, deposit-based banking, the
private banks faded away and just seven firms, which became known as the "Associated
Banks" dominated the scene. Each had its Dublin head office in the Dame Street/College
Green area and we are standing in one of them, that of the Royal Bank, today. The Royal
was - like the Hibernian - a Dublin-based bank, one of those which decided it could survive
despite being precluded from issuing its own banknotes by the existence of the Bank of
Ireland's monopoly. Others began with headquarters in Belfast (Ulster Bank and Northern
Bank) or London (the Provincial and the National); and the Munster and Leinster had its
origins in Cork. Each of the banks had its own cultural and social make-up, which explains
why Daniel O'Connell crops up as promoter or supporter of three of them, though he is most
associated with the National Bank. I was surprised a few years ago when visiting the main
London office of the Royal Bank of Scotland to find a full length portrait of Daniel O'Connell in
a prominent position at the top of the grand staircase. Tracing through the genealogy of the
component banks of that group I realised that the portrait must have come from the old
National Bank which sold its UK offices to Williams and Glyn in the 1960s, which in turn
became part of the NatWest Group subsequently acquired by RBS. Continuity and tradition
long remained the watchword.
The 19th Century saw a transformation in the design of banking halls, and Michael gives an
illuminating account of the key elements. Illumination was indeed a major goal of the
architects as they sought to bring light into the interiors through devices such as the
clerestory - another echo of Church architecture emphasised by Michael.
Although many of the buildings are no longer used by the banks that built them, if you look
closely enough in this neighbourhood, original bank names spring out at you from facades.
The National Irish Bank on Dame Street carries the name "Hibernian, 1824" (in this case
there is no continuity, as the Hibernian became part of Bank of Ireland, whereas NIB is a
descendant of Northern Bank); "Provincial Bank Chambers" clearly inscribed over a door at
the Westin Hotel in College Street reminds us where one forerunner of AIB used to be. And
other less evident architectural and decorative details are signalled by Michael to the reader
such as the former branch of the National in Rathmines with its "carved tympana with an Irish
harp charged shield, placed between wolfhounds rampant."
The main banks moved their headquarters out of the College Green/Dame Street area in
the1960s and 1970s. Bank of Ireland moved to Baggot Street in the 1970s and AIB moved
its head office to Ballsbridge in 1979, just as the Central Bank tower block on Dame Street
was being completed. This reflected greater centralisation of the business decisions and
processing in headquarters leading to the need for larger central offices.
The prominent situation occupied by bank branches in the city has lent them a particular
allure for other merchants and traders. Over the last decade particularly, sales of many bank
branches have resulted in major changes in usage.
Just a few yards from where we are this evening in Foster Place is the original home of the
Currency Commission - the forerunner of the Central Bank and indeed the first headquarters
of the Central Bank of Ireland. I heard a wit saying that things have not changed much since
the Central Bank moved out as the building now houses a waxworks.
The Central Bank's tower in Dame St. was suitably large enough to accommodate all its staff
until membership of the euro and the concentration of financial regulation (beyond banking)
under the Central Bank umbrella in the early 2000s.
A further rapid expansion in Central Bank staff has come about since the financial crisis,
reflecting in large part a rethink of the degree of intrusiveness and detailed supervision that is
seen to be necessary for prudential purposes. This applies not just to the local banks. It may
not be widely recognised that Ireland, through what is no longer formally called the IFSC, is
the 15th largest international financial centre in the world according to tabulations by the IMF.
No wonder it needs substantial staff resources to be sufficiently regulated. In this case it is
not just a question of doing enough, but of being seen to do enough. Regulation is a public
service both to the customers of financial firms and to the firms themselves, as well as, of
course, a protection against losses that could fall on the State. Given what has happened
elsewhere, any doubt over the quality of supervision and the degree to which international
standards are being enforced on financial firms in the IFSC would adversely affect the
functioning of that sector. Of course the cost of regulation is also a factor in industrial
location; inefficient regulation can therefore be as useless as no regulation.
Now the Central Bank's almost 1400 staff are a multiple of what can be accommodated in
the Dame Street building, and of course we can't imagine adding floors to the already
notoriously over-high building. Staff in fact are now scattered across six locations as far apart
as Spencer Dock and the top of Harcourt Street (in addition, of course to the Currency
Centre in Sandyford).
As you have heard, the Central Bank is currently looking for a new home in the city. No firm
decision has been taken, but it looks as if the clock is ticking for our occupancy of the Dame
Street tower. We won't go suddenly, and we won't board it up. There could be scope to retain
some central banking activities here for a number of years, if it takes that long before a
suitable purchaser emerges. We have some ideas here and are open to others.
A new development on Dame Street has been the arrival of the Occupy Movement. While
not everyone is happy with their being there, several people have said to me that their
presence symbolises, albeit in a rather ambiguous and even incoherent way, the feelings of
a large part of society in regard to what has gone wrong in the financial sector and with the
banks. We don't welcome their presence, but - as long as no-one is harmed or put in danger
by them - we are not at present inclined to take action to have them moved away.
All of this serves to remind us that the financial landscape in which we live - and transact -
changes all the time. This publication provides us with an insight into the development of a
fine architectural tradition. And valuably it chronicles how the evolution of trade and
commerce has left its mark through the bank architecture around the city. I would like to
congratulate Michael and the City Council on a fine publication.