Bank pledges to stay out of state control 'at all costs'
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ALLIED Irish Banks (AIB) remains implacably opposed to nationalisation, anxious shareholders were told at the bank's annual meeting yesterday.
"We wish to avoid nationalisation at all costs. Happily, that is the Government's policy," bank chairman Dermot Gleeson said as shareholders fretted that they could lose the remainder of their investments.
"It would be bad for shareholders and bad for Ireland."
Twenty academic economists recently said the State should nationalise the country's two major banks.
Finance Minister Brian Lenihan has said he does not want to take over the banks. Still, he said the same thing about Anglo Irish Bank last autumn and was forced to nationalise the bank in December. That move has encouraged investors to fear further nationalisations, Mr Gleeson said.
"I'm hoping against hope the bank will not be nationalised. I've already lost all my Anglo shares, my Waterford Crystal," shareholder said Eileen McGee told the meeting.
Some of those attending the meeting went further, with shareholder Seamus Bergin accusing the Government of "daylight robbery" for taking a 25pc stake in the bank in return for a €3.5bn cash injection.
Despite such objections, the motions in favour of the Government's re-capitalisation were carried by more than 99pc of shareholders.
Perhaps the day's most heartfelt contribution came from Susan Kelly who said she and her husband "feel absolutely robbed and cheated".
"You have paupered a generation and shareholders by your recklessness," she said in a quiet voice that trembled at times.
"The pain, I can tell you, is real; breath-taking and life-taking in some instances." Her contribution was met by 50 seconds of applause, the longest applause for any of yesterday's contributions.
Laughed
Many shareholders laughed wearily when told that AIB chief executive Eugene Sheehy had invested all of his bonus in AIB shares in 2007.
The value of the 255,845 shares Mr Sheehy held on the last day of 2007 have fallen from just over €4m to €224,376.
Mr Sheehy, who will leave the bank when a successor has been found, offered shareholders some grounds for hope, telling them that the bank now has about 40pc of the new mortgage market. AIB had issued 370 mortgages in April, the highest number for the bank since May 2005.
The mortgage market is shrinking, however, and the bank is seeking to expand its share of the market as a condition of the bank guarantee scheme. Only 1pc of the bank's 163,000 mortgages are more than 90 days overdue and the bank did not repossess any family homes last year, he added.
Costs at the bank are also falling, he said. About 1,500 of the bank's 26,000 staff have applied for some form of leave.
While admitting that lending to developers of residential land was the bank's biggest mistake, Mr Sheehy rejected the view that all loans to developers would go bad.
There was repeated criticism that only three board members, all due to retire in three months, sat at the podium: Mr Gleeson, Mr Sheehy and Mr John O'Donnell. None of the new directors faced the shareholders.
- Thomas Molloy and Joe Brennan
