Taxpayers foot €3.5bn bill for AIB 'mistakes'
AIB chairman Dermot Gleeson was pelted with eggs by a disgruntled pensioner at a tense shareholders' meeting yesterday
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Thursday May 14 2009
TAXPAYERS pumped €3.5bn into Allied Irish Bank last night after its outgoing chief executive admitted he was haunted by the scale of the bank's property loan fiasco.
Angry shareholders overwhelmingly backed the State's recapitalisation plan for the bank following a tense showdown with the board yesterday.
Shareholders voted by a majority of over 99pc on eight resolutions to pave the way for the €3.5bn bailout.
Addressing the annual meeting, outgoing chief executive Eugene Sheehy said the "real mistake" was that the bank lent too much for development land in Ireland.
He said he had to take responsibility for that and it was why he was retiring.
Earlier, the bank's extraordinary general meeting was briefly interrupted by an angry shareholder who threw eggs at the board.
One spattered on to the suit of chairman Dermot Gleeson and hit the wall behind where board members were sitting.
The disgruntled shareholder -- 66-year-old Gary Keogh from Blackrock in Dublin -- was escorted from the meeting by security staff.
He said his pension income had been wiped out by the collapse in bank shares.
"The whole board should be replaced by Mickey Mouse and Donald Duck," he said.
His attack initially shocked onlookers for a short while before they took the roving microphone one-by-one to criticise the running of the bank, which is facing €4.3bn in failing loans, a crumbling share price and the global credit crunch.
Emotions ran high as 600 angry shareholders later voted to accept the Government's €3.5bn recapitalisation plan.
There was applause for calls to cap bankers' wages at €90,000.
One shareholder, Maura Fitzgerald, complained the bank purchased a corporate box in the redeveloped Lansdowne Road football and rugby stadium.
"The way they lent money was disgusting and reckless," one man said. "Why didn't somebody stop them?"
Cornelius Cagney, from Limerick, said the bank's directors were a bunch of idiots and a cosy cartel appointed by the Government.
"It's like a barrel of apples. Put 10 bad apples into it and what do you get at the end of the year? A full barrel of rotten apples," said Mr Cagney.
Addressing shareholders, Mr Gleeson apologised unreservedly for the anxiety and distress the bank's actions had caused.
He said he is acutely aware of the anger and disappointment felt by many shareholders, following recent problems.
He also claimed to be acutely aware of the individual hardship brought about by the fall in the bank's share price and the temporary suspension of the dividend.
Mr Gleeson said there had been extraordinary volatility in world financial markets and economies, but even so, decisions were made by AIB which have compounded its own problems.
He added his decision to retire in July was the correct thing to do as shareholders and stakeholders are entitled to accountability and there's a need for change.
But his apologetic tone was coldly received by shareholders, who expressed anger and disappointment at the bank's actions.
Many of the shareholders who spoke were elderly and said they had lost huge amounts of their income.
Two months ago, AIB expected loan losses to hit €2.9bn this year, rising to €4bn in a worst-case scenario.
Earlier this week AIB was forced to admit that its loan losses would outstrip even its most grim forecast to reach €4.3bn this year.
The bank's shares have fallen 23pc to 87.7c since the warning. The stock is down 96.3pc from its all-time high of €23.95 in February 2007, which valued the group at almost €21bn.
Mr Gleeson refused to bow to pressure from a number of shareholders that AIB only look externally for a replacement for Mr Sheehy. The group is understood to have hired executive headhunters, Spencer Stewart, to conduct a trawl for outsiders.
The head of AIB's Capital Markets division, Colm Doherty, is the most hotly-tipped inside candidate.
- Joe Brennan and Thomas Molloy
