As the newly appointed chairman of the Irish Management Institute, AIB Bank managing director Kevin Kelly was involved in the recent decision to cancel this years IMI annual conference in Killarney. Local tourism interests were incensed.

"We needed to decide by the end of March. We made our decision on the basis of the guidelines in place at that time. We were concerned that if we went ahead we would be flaunting the guidelines then in place.

"And because IMI is a not-for-profit organisation we were at a point of no return - if we had gone ahead and the situation subsequently deteriorated and we had to pull out, we would have lost a significant amount of money because commitments would still have had to be honoured. So we had to make a decision and it was a very difficult one," Mr Kelly explained.

But, ever the peacemaker, he added, "we will be back in Killarney next year".

Kevin Kelly is no stranger to difficult decisions. Next month he retires from the AIB Group where, among many other things, he has had to deal with the DIRT fallout and with recent accusations of overcharging. Since September 1995 he been in charge of the retail and commercial operations of the bank in the Irish market, Northern Ireland and the UK, responsible for over 300 branches and about 13,000 employees.

He was an unusual choice for the job since he was not a career banker. He only joined AIB in 1991, at the age of 50, as group financial director, having had a wide-ranging business career including the high-profile job of administrator of the PMPA insurance group.

As an accountant with the then Coopers & Lybrand, and its managing partner for two terms from 1982, he was involved in receiverships and advisory services. And in his early career he worked with Price Waterhouse in Italy and Holland and lectured in management development with Coopers and Lybrand in London. He was also group chief executive of the Agra Trading Group.

"I joined the bank on the understanding that I would move into the business end in time," he said, when asked how he landed in his current role. And he said he met "no resentment or resistance" from traditional banker colleagues.

Big on the importance of communication with employees, he immediately took on a punishing round of roadshows to meet staff throughout the operation. "It helped me to get to know people and for people to see that I was interested in the issues of concern to them."

Mr Kelly is enthusiastic about his time at AIB. "It has been a fascinating experience and I have been lucky in that it has gone very well. Banking is an amazing and complex business. It was a steep learning curve and I am constantly learning more."

Through his receivership experience he was used to learning quickly about businesses, "but AIB was a more complex business than I thought".

His arrival as head of the retail and commercial operation coincided with the start of the economic boom. "This made it a very positive and exciting environment to work in," he said.

Over the period he feels AIB has quietly done a huge amount of repositioning, investing in technology and information systems and introducing cultural change. But it has not all been plain sailing. He has had to grapple with some difficult issues. Among the most difficult was the DIRT debacle - where AIB eventually ended up paying £90 million (€114 million) to the Revenue in back tax, interest and penalties.

"This was a very difficult time for us and it was very protracted. It was very frustrating because we could say nothing while the process went along. It was particularly hard on our staff who took a lot of hassle at the counters and it was difficult to support them when we couldn't comment," he said.

"We were dealing with things that happened a long time ago in a different climate and different environment. We believed we had an agreement [with the Revenue]. But if there were shortcomings our chairman apologised, and now having reached a settlement we just want to put the whole experience behind us."

Asked if the affair had damaged the bank, he said that "this is not showing up in any of our research".

He described the hype around Internet banking as one of the most difficult calls he had to face.

"At the time we started to doubt our own common sense. We were being disparaged as an old-economy industry which was going to be wiped out by new non-bank competition driven by the Internet. We had a lot of confidence we were going in the right direction and would develop the right product for our customers. But as with any business strategy, the self-doubt crept in and we worried if we were moving at a fast enough pace," he explained.

With telephone banking and 24-hour online Internet banking, he believes AIB now has an attractive service range for its customers. On the future he believes that the gradual reshaping of branches towards "service and relationship building" will continue, while more and more transactions will be conducted electronically.

On the latest accusations of overcharging by the banks, Mr Kelly believes AIB has no apologies to make. "We were the first to bring in pre-notification of charges and we provide total disclosure on statements. Of course errors arise and we try to deal with them.

"But there are cases where people take a view and we don't have the same view. We are in business and extreme cases of disagreement can end up in litigation," he said.

Mr Kelly argued that perceptions that the banks make huge profits and that the Irish market is not competitive were very unfair.

"The market is very competitive and getting more competitive all the time, but we are very efficient. We have to be efficient at what we do and our charges are not out of line with those of the UK banks," he insisted.

On customer complaints about refusals by branches to cash cheques, Mr Kelly insisted that the Irish market was lagging far behind other euro-zone countries in the transfer from cash and paper to electronic banking.

"We need to make the change to make the system more efficient and move from the antiquated system of cheques. There can be some short-term inconvenience for the customer but in the longer term it will be cheaper and more convenient for both business and personal customers," he said.

On his achievements within AIB, Mr Kelly cites a partnership agreement signed with the IBOA union 18 months ago as setting the base for a good working relationship between the bank and its employees and allowing for change to be embraced.

"We worked on it for a number of years. It means we are completely transparent with the IBOA. We set out the changes we see coming down the track at the beginning of the year and issues are discussed. It makes for good working relationships."

Mr Kelly's business philosophy revolves around people and strategy.

"You have to recognise that all people in the organisation are important. You need to be able to pick the right people, motivate and retain them. And if you don't get it right you have to have the courage to do something about it, while acting fairly."

Every business needs to "have a strategic sense and then to keep questioning it. No strategy is written in stone. If it was it would become obsolete. So managers must be realistic and keep questioning and probing to ensure business is going in the right direction," he stressed.

Asked why he went into AIB, Mr Kelly said that as he came towards 50, he decided he wanted to make a career change and he informed his colleagues in Coopers & Lybrand that he was going to leave.

"I had no job but I knew that if I didn't make a change then it would be too late," he said.

Then Friedhelm Danz of the Agra meat and food distribution group asked him to become chief executive of his Irish operation.

"He had a dream to create the equivalent of the Kerrygold brand for Irish premium quality meat and had bought the Polaroid factory in Newbridge to pack his `Greenfields' meat. The concept fitted well with the value-added approach to the food industry." Mr Kelly took the job. But after about 18 months it became clear that the project would take far longer and require far more funds than had been anticipated to bring to fruition.

"We agreed that it was not really practical to continue. With the concept gone I felt I didn't have a role to play. Around the same time I was approached by AIB to become finance director." He described his time with Mr Danz as "a very exciting time. Mr Danz was a visionary".

His time as administrator of the PMPA was an "extraordinary experience". The most unusual thing for him was being faced with constant publicity. But the job itself "was a hell of a challenge. Our brief was to rescue and make sound the business that insured the majority of Irish car drivers. I wasn't sure for a long time that we could pull it off," he said.

Over the coming months Mr Kelly will make decisions on the offers he has been receiving. He has already decided to accept some directorships and advisory roles, though he is not willing to divulge details until he steps down from AIB.

But on advice from friends who have already retired, he is determined to be careful about what he takes on so that he can retain enough free time and flexibility to indulge his non work interests, which include travelling, golf, art, music and reading.

"The attraction will be not having any routine."