Catherine McGuinness HR Business Partner Education BSc Information Mngt from Queens

1. Catherine McGuinness HR Business Partner Education BSc Information Mngt from Queens MA in HRM from Kingston University MCIPD Industry Background • 6 years Financial Services – Bank of Ireland and RBS • 2 years Telecoms • 2 years Third level Education • Prior to this 3 years in IT Recruitment

2. 2008 / 09

3. New Financial Order … ? • Credit – availability, price & risk - the notion that markets correctly price risk has proven to be flawed • a generation of bankers who will now be scarred by losses – confidence rebuild • Transition from a model of higher volume/lower prices to lower volume/higher prices For Businesses • Good credit history, solid security & sound business plan • Rigorous scrutiny of the borrower and valuation of the asset (security) • Favours established institutions with strong B/S • Entrepreneurs & Fledglings ? Risk Capital … what’s changed? • Those with access to capital can pick up assets at lower prices For Households • Mortgage Market already adjusting (LTVs, Deposits) • Risk Aversion – repay debt / save more but shy away from complex products • Borrowers – those in “safe” occupations in better position to borrow

4. A Banking model undergoing fundamental change … From a world where …. • a market-based system • a context where the cost of capital was very low • “Pricing to Perfection” and “Uncompensated Risk” • Aggressive gearing and risk appetite • Very benign set of economic circumstances • Transactions premised on inflationary expectations • Profit and Volume-driven goals in high growth environment To a world where …. • a largely regulation-based system • Bank Capital is at a premium • Re-pricing of Risk • Aggressive deleveraging and risk aversion • Very challenging economic outlook 2009 & 2010 • Deflation is a growing theme • Return on Capital / Economic Profit assuming primacy • Understanding and Re-pricing of Risk Transition- from high volume/ lower prices lower prices/ higher prices • Stricter credit guidelines/ security valuations • Libor pricing on all term debt becomes de-rigueur • Return on capital primacy Political Repercussions • Banker/ Customer relationship? Transactional v Relationship? • Approach to cash-generative businesses v debt hungry? • Syndicated lending for even modest-size deals? • Increasing demand for debtor finance? • M & A/ Consolidations- more non-NI ownership of NI firms

5. Building Consumer Confidence – Focus on Treating Customers Fairly • The Financial Services Authority (FSA) requires all regulated firms to support their principle that a firm “must pay due to regard to the interests of its customers and treat them fairly”. The initiative has been defined as Treating Customer Fairly (TCF) • The main challenge now faced is how we as a business demonstrate to the FSA that our customers are being treated fairly, and specifically that TCF is intrinsic to our corporate cultural. The FSA has developed a Cultural Framework based around “drivers” which have a significant influence on behaviours within firms. The six key drivers are: • Leadership; • Strategy; • Decision-making; • Controls; • Recruitment. Are there clear recruitment criteria reflecting the required competencies for the role? • Training and competence Are there clear criteria for identifying talent within the organisation? • Reward. Does pay and reward encourage the right behaviours, and is there a clear link between salary reviews and appraisals?

6. Recruitment - Workforce Management • 5% reduction in Headcount across the Group. Driven predominantly by a policy of non-replacement of departing staff. • Prioritisation / Reduced Flexibility • Review Operating Models • Proactive redeployment • ‘One Bank Ethos’ - Promote flexibility and the transferability of skills within and between teams • Attendance Management

7. Training and Competence – Talent Management / Retention • Talent Identification • Individual Development Plans promoting development opportunities • Succession Planning for Business Critical Roles / skills • Physiological Contract • Building Line Manager Capability

8. Reward - Employee Engagement and Motivation In the absence of financial reward, how do you maintain staff motivation? • If Maslows Theory rings true that would be • Physiological Motivation: Work-life balance and pay salaries that allow workers to buy life's essentials. • Safety Needs: Relative job security, • Social Needs: Generate a feeling of acceptance, belonging, and community by reinforcing team dynamics. • Esteem Motivators: Recognize achievements, assign important projects, and make employees feel valued and appreciated - flexibility. • Self-Actualization: Offer challenging and meaningful work assignments which enable innovation, creativity, and progress according to long-term goals Communication and clear and visible Leadership !