AIB’s shareprice has shown little reaction to the publication of the report into the alleged fraud at its Allfirst subsidiary. At 3 p.m. AIB remained unchanged at €13 in Dublin this afternoon.
Market analysts in Dublin expressed surprise today that the report prepared by Mr Eugene Ludwig for the AIB board dis not apportion more responsibility to senior managers for the alleged fraud particularly given the amount the amount of money involved.
In particular market sources were surprised that Allfirst’s chief executive Ms Susan Keating was not dismissed.
However, according to Mr David Odlum and John Kelly of NCB stockbrokers in Dublin given recent events AIB wanted to maintain the stability of the US business. "It is more important to maintain the business momentum at Allfirst in the short-term, but the strategic position needs to be addressed over the longer term." Mr Odluim said.
The appointment of Mr Eugene Sheehy managing director of AIB's Irish retail operation as Allfirts's new executive chairaman should also reassure investors, Mr Odlum said. Mr Sheehy is highly respected in banking circles and is largely responsible for the success of AIB's retail franchise.
Mr Stuart Draper of Dolmen Butler Briscoe stockbrokers said the findings of the investigation, as well as the Allfirst management changes, should go some way towards improving AIB’s credibility, which has suffered significantly in recent weeks.
But he added the report will not improve AIB’s current financial position, which has weakened as result of the scandal. AIB’s Tier 1 ratio - a measure used to measure the financial strength of banks - has fallen from a healthy 10 per cent to 7.2 per cent as a result of the FX trading loss.
Dolmen also played down a merger between Bank of Ireland and AIB. Mr Draper said talk of a takeover bid from possibly Royal Bank of Scotland was also premature. "Any approach that may be made is likely to be rejected by AIB at this time, with recent banking mergers such as Royal Bank of Scotland/NatWest, Halifax/Bank of Scotland and BNP-Paribas only creating value for shareholders because they were achieved on a friendly basis.
"Therefore, our view is that AIB is determined to remain independent, at least until after it repairs and re-builds its US operations, which will take at least nine months." Mr Draper added.