THE GOVERNMENT has moved to take a greater say in the day-to-day running of the State's largest bank, Allied Irish Banks, with the appointment of outside consultants to work with management before the bank moves into State control.
The National Treasury Management Agency (NTMA), which manages the Government's involvement in the banking sector, has appointed a team from accountancy firm PricewaterhouseCoopers (PwC) to AIB.
Minister for Finance Brian Lenihan said last week the Government would take a majority controlling stake in the bank after the Central Bank said it would need a further €3 billion to cover higher-than-expected losses.
The Government is expected to effectively nationalise AIB over coming months, making the bank the fourth institution to fall into State hands as a result of the banking crisis and property crash.
A sale of new shares in AIB will be underwritten by the Government in a move expected to increase the State's ownership to a stake of more than 90 per cent from almost 19 per cent.
Up to three senior consultants from PwC will help the NTMA on the increased workload facing the agency with AIB, as the Government injects up to a further €3.7 billion in cash, on top of the €3.5 billion invested last year.
The appointment follows the resignation of AIB executive chairman Dan O'Connor and the termination of the contract of managing director Colm Doherty.
The Government sought their departures as a condition of the second State bailout.
Mr Lenihan has said Mr O'Connor will leave in the coming weeks, while Mr Doherty will depart before the end of the year.
A spokesman for the NTMA said the PwC team would help the agency with its increased workload arising from the Government taking control of the bank over the coming months.
The PwC consultants will work closely with the bank on the running of the institution as the management team changes, he said.
"Senior management are still very much in place at the bank and we will be increasing our level of engagement with them," he said.
PwC consultants would be working on "ongoing business issues" and "day-to-day" matters at the bank, said the spokesman.
The accountancy firm was paid €6.65 million by various State agencies for its work during the banking crisis up to July 2010, according to a recent report by the Comptroller and Auditor General.
Mr Lenihan has signalled his intention to move quickly to appoint new senior management to the top positions at the bank.
Prospective candidates for senior AIB management posts will be interviewed from a shortlist drawn up by the NTMA.
The Financial Regulator is understood to be keen to see outside appointments made to key management positions in an effort to change the culture at the bank.
The Minister has said he would work closely with the board of the bank to ensure AIB develops "a renewed strategic focus" on the Irish market following the sale of the bank's overseas businesses.
Heavier losses on loans being sold to the National Asset Management Agency led to an increase in the bank bailouts last week to €50 billion in a worst-case scenario.
AIB's capital bill rose to €10.4 billion from €7.4 billion, scuppering the bank's own plan to keep the institution out of State control by selling overseas business and raising cash from investors.
