AIB to raise €2bn as part of blueprint for restructuring
Stalemate over appointment of new chief could hamper plans
Restructuring plan: Allied Irish Banks. Photo: Bloomberg News
Allied Irish Banks is at an advanced stage of drafting a restructuring plan that needs to be submitted to Brussels by the middle of next month, which will set out in detail how the bank plans to avoid majority state ownership.
But if the stalemate over the appointment of a new chief executive of the group is not resolved before the plan is submitted, it could throw any commitment to the strategy into question.
The bank has already said it plans to raise €2bn over the next 12 to 18 months. AIB has outlined that equity-raising options include tapping investors, selling a strategic stake or offloading non-core assets.
A draft of the document, referred to by the board as a 'viability plan', and required under the State's €3.5bn recapitalisation of the group in May, is currently being circulated between the bank and the Department of Finance.
A similar restructuring blueprint was filed with the European Commission by Bank of Ireland at the end of September. Nationalised Anglo Irish Bank, which has received a €4bn equity injection from the State, must submit its business plan at the end of November.
All plans have to demonstrate that the banks will not be reliant on a drip-feeding of capital from the State in future years.
They must prove that the lenders can become viable again -- or else outline plans for an orderly wind-down.
Jobs
This will be looked at most critically in the case of Anglo, which is set next week to announce the axing of hundreds of jobs.
Finance Minister Brian Lenihan signalled yesterday, during the committee stage of the NAMA legislation, that Anglo could fit the bill with regard to Fine Gael's proposal for a new national recovery bank.
Observers say it is most likely that Brussels will kick all three banks' plans into a full investigation after an initial two-month review period -- in order to weigh up the prospects of the industry as a whole.
"There will have to be separate responses from the commission to each of the banks, but, in essence, the process is most likely to be approached from an industry-wide perspective," said one banking source, adding that it is likely to be February or March before there is any outcome.
All three plans have to run through five-year projections for their profit and loss accounts and balance sheets and, more importantly, how they plan to reach these targets.
Analysts largely believe that a sale of AIB's 24pc holding in US associate M&T Bank would net the bank about €600m in capital.
They are less certain about whether AIB may flog its 70.2pc-owned Polish unit, Bank Zachodni BWK.
Ultimately, the future direction of AIB will be decided by its new chief executive. AIB's board has been at loggerheads with Mr Lenihan for some time over its intention to appoint Colm Doherty, head of its capital markets division, to replace Eugene Sheehy in the position.
Sense of concern
Sources said that there growing sense of concern among domestic institutional investors about how the standoff is distracting the loss-making group's top brass at a crucial time.
However, there is no consensus view, as yet, as to what must be done.
While some fund managers believe that the minister, who effectively must approve an appointment, cannot be seen to back down, others point out that Mr Doherty, head of a highly-profitable unit, is best positioned to nurse the bank back to recovery.
- Joe Brennan
Irish Independent
