Former Bank of Ireland boss Boucher was allowed far too much leeway by lax regulators

Soon after she took over the reins, she found herself being dragged into a meeting with Finance Minister Paschal Donohoe to explain why the bank was so slow at owning up to and sorting out the tracker overcharging mess.

The bank, under old boss Richie Boucher, had been steadfastly holding out on giving trackers back to 2,000 of its own staff.

This was one of the key issues discussed when, days later, McDonagh met senior officials from the Central Bank. It shows just how rotten things at the bank are that within days of the two meetings Ms McDonagh did a U-turn and conceded that the bank had an extra 6,000 tracker cases it was now prepared to concede, including the staff mortgages.

It now has 10,300 tracker-denial cases, the highest of any lender.

McDonagh has now promised a more customer-centric approach from Bank of Ireland, and she is showing early signs of delivering on this. What a change from the approach of her predecessor.

Boucher was unique in that he survived in a senior role in Irish banking despite the collapse of the sector.

He did not take prisoners. He was adamant that his bank was not cutting its variable mortgage rate, one of the highest in the market. Instead, he offered customers who wanted better value low fixed rates, in an attempt to lock them in and stop them switching.

The bank often adopted an uncooperative approach to media queries, even after the economic crash.

But it is now clear his approach has not been good for the bank.

He had only provisioned for €20m to cover the cost of tracker restoration and the refunds. Bank of Ireland has now said the total cost of putting customers back on low tracker rates, refunding them for overcharged interest payments, and compensating them at a rate of 10pc of the refunds, will cost the bank up to €200m.

This is up from €26m previously set aside by the bank.

Banking analyst at Merrion Stockbrokers Darren McKinley questioned the honesty of the bank, and said it may not be able to pay a dividend.

What a mess McDonagh now has to clean up. Just why were Boucher and others embroiled in the industry-wide tracker scandal allowed to carry on the way they did?

All of this raises uncomfortable questions for the Central Bank.