Senior AIB executives forced out
Two of Allied Irish Banks' leading executives have been forced out after the Government effectively took control of the group, it was announced today.
Chairman Dan O'Connor will quit within weeks while managing director Colm Doherty will leave the bank before the end of the year after 13 months in the job.
The state is expected to pump another €2bn into AIB on top of the €3.5bn put in last year as the management fights to source €7.9bn needed to balance the books.
Finance Minister Brian Lenihan said the boardroom changes are necessary but refused to say if he ordered them.
"We are a small country with a very fragile banking system and that type of political pyrotechnics does not actually help in promoting confidence in the system worldwide," he said.
The additional funding gives the taxpayer majority ownership in AIB and the Irish state will hold 75pc voting rights.
"The bank is viable but it is unattractive to external investors. The state has to make the necessary capital investment but the bank will be restored in its greatness," Mr Lenihan said.
"Management change, board change have to take place now in this institution. The bank needs a new beginning so it can be restored to its former greatness."
According to AIB's annual report for 2009, Mr Doherty made a total of €833,000 which included a salary of €622,000, €145,000 pension contributions and €66,000 in benefits like a company car or special directors' loans. He also had share options.
Mr O'Connor was paid €187,000 in fees. His flat fee for executive chairman was €276,000 a year.
AIB has already gone some way to refinancing itself with the sale of its profitable Polish wing BZWBK to Spain giant Santander for €2.5bn.
The bank has also transferred €6bn of loans to the state's "bad bank", the National Asset Management Agency (NAMA), and another €13.5bn is expected to move over.
The minister said AIB is unlikely to be able to source money on the open market.
Mr Lenihan added: "The high level of state support being provided to AIB, as an institution, is absolutely necessary given the central role that AIB plays in the Irish economy and in the Irish financial system.
"In the coming weeks I will be working closely with the board of the bank on behalf of the Government to ensure that AIB successfully overcomes its current challenges and develops a renewed strategic focus on the Irish market following the divestiture of its overseas operations."