THE ALMOST fully nationalised Allied Irish Banks (AIB) named nine members of its new management team yesterday but the search for a chief executive continues.
The bank, which is 93 per cent State-owned, has appointed six internal executives and three external candidates to the team which will report to AIB executive chairman David Hodgkinson.
A spokeswoman for the Central Bank said it had approved all of the new appointments.
AIB is being restructured into three “customer-facing” divisions – personal and business banking, corporate and institutional banking, and commercial banking.
Chief financial officer Bernard Byrne, who joined from the ESB in May 2010, is the new director of personal and business banking.
Another internal candidate – Jerry McCrohan, managing director of AIB capital markets – is being appointed director of the other two new banking divisions.
Mr Hodgkinson told The Irish Times the bank would need to offer “a market-based compensation package” to appoint a new external chief executive and that it was working with the Department of Finance to pay a salary above the €500,000 Government cap.
“Our engagement with the department has been positive,” he said. “The reality is that we have got to do some tough things.”
He still hoped that the bank would appoint a chief executive late in the third quarter or early in the fourth quarter of this year.
The bank has a number of potential candidates but no shortlist has been drawn up yet.
None of the new executives is paid above the cap, he said.
The bank’s redundancy plan for 2,000 staff was “at an advanced stage of planning” and payments to departing staff would be similar to others in the industry.
Mr Hodgkinson said the bank was appointing four external candidates to key roles at the bank. He viewed Mr Byrne as an external candidate given that he only recently joined AIB and had experience outside the bank.
Peter Spratt, a partner at PricewaterhouseCoopers (PwC) specialising in corporate restructuring, has been hired to run the bank’s non-core division for the next two years. This unit will “house, manage or dispose of selected assets” as AIB deleverages €20 billion in loans.
Keith Davies, a banker and solicitor with an expertise in turning around troubled companies, has been appointed transformational director to lead the restructuring.
Stephen Bell, a director of PwC, which is advising Mr Hodgkinson on the running of the bank, has been appointed acting chief risk officer.
The external search for a permanent chief risk officer is about six weeks to two months ahead of the appointment of a chief executive. Finding a good chief risk officer was “a bit like hen’s teeth”, Mr Hodgkinson said, given the changes in risk management across banks internationally.
Paul Stanley, AIB’s financial controller, has become acting chief financial officer pending an internal and external search for a permanent appointee for the role.
Joe O’Connor is continuing in his role as chief credit officer.
Marcel McCann and John McCann retain their roles as operations and technology director and human resources director respectively but now report to Mr Spratt.
Two senior bankers lost their places on AIB’s executive team.
Robbie Henneberry, head of the bank’s Republic of Ireland division, has been appointed head of the Northern Ireland business.
Nick Treble, head of AIB’s UK division, will continue to manage the bank’s British operations. Management changes would be made to this unit in due course. AIB and the Northern Irish operations are to become more aligned.
Mr Hodgkinson described the change programme as the “most challenging” AIB had undertaken.
It would move from “a model of entirely separate businesses to a ‘one bank’ model”, he said.
Credit rating agency Moody’s downgraded AIB’s subordinated debt, describing the bank’s offer to pay the bondholders as little as 10 cent in the euro for their debt or virtually nothing if they refused as a “distressed exchange” due to its coercive nature.
