THE three top board members at Ireland's biggest bank are quitting to avoid an embarrassing revolt by major shareholders.
Allied Irish Banks chief executive Eugene Sheehy, finance director John O'Donnell and group chairman Dermot Gleeson signalled they will fall on their swords in advance of the bank's stormy annual general meeting.
The latest round of top-brass resignations in Irish banking come as a number of major shareholders privately threatened not to support the re-election of key board members at the agm on May 13.
The Government will also have 25pc of the voting rights in AIB for the crucial poll, following on from a separate shareholder vote hours earlier on the State's planned €3.5bn investment in the country's biggest bank.
There had been rising industry speculation in recent weeks that Finance Minister Brian Lenihan would vote against a number of the re-elections.
It is understood that Mr Gleeson, a top barrister and former Attorney General, met the minister yesterday to inform him of the boardroom changes.
Mr Sheehy and Mr O'Donnell informed the board on Wednesday that they plan to retire, while Mr Gleeson plans to step down in July.
Spiralling bad loan losses leave AIB on track to post its first annual loss this year since it was created in 1966 through
the merger of Provincial Bank, Royal Bank of Ireland, and Munster & Leinster Bank.
Taxpayers are also expected to end up with majority control of the bank and rival Bank of Ireland after they finish transferring risky property loans to the National Asset Management Agency.
AIB's top figures had managed to hold onto their seats as Bank of Ireland, Anglo Irish Bank, Irish Life & Permanent, Irish Nationwide and EBS lost 15 board members between them in recent months.
Shares in AIB extended their gains to close 18pc higher at 96c on the news.
AIB has been blamed for a number of gaffes in the past year. Its decision to hike dividends for the first half of last year by 10pc backfired, as investors worried that the group should be preserving capital as bad loan losses began to mount.
Mr Sheehy's comments -- weeks after the €440bn guarantee scheme was brought in -- that the group "would rather die than raise equity" later came back to haunt him as the group was forced to accept a €3.5bn bailout.
"But the writing was really on the wall last week when AIB was forced to come out and say it will have to raise an additional €1.5bn," said a senior Dublin fund manager, who declined to be identified.
Before that announcement, the bank believed the €3.5bn State capital injection would leave it with enough reserves in the coffers to withstand the worst-case scenario of writing off up to €8.5bn of bad loans over three years. However, sources said the Government was looking for the bank to be fireproofed against a "significantly higher number".
The bank plans to raise most of the money by selling assets, likely to include its 24pc stake in US bank M&T and its 70.2pc-owned Polish unit Bank Zachodni.
Dan O'Connor, former chief executive of General Electric's European consumer finance business and non-executive AIB director since 2007, will take over from Mr Gleeson.
AIB said it will search for successors for both Mr Sheehy (54) and Mr O'Donnell (54), who both plan to retire over the coming months.
Colm Doherty, head of the group's capital markets division, is being tipped as favourite inside candidate. He is believed to have thrown his hat into the ring in the last contest for the top job in 2005, when Mr Sheehy emerged as the winner.
Non-executive director David Pritchard is set to take up the new role of AIB deputy chairman next month.
Eugene Sheehy - chief executive
EUGENE Sheehy (54) has seen plenty of highs and lows since he took over the top job four years ago.
He was the first chief executive to push profits above €1bn but he was also one of the four bankers forced to beg Finance Minister Brian Cowen and Taoiseach Brian Cowen to save the nation's banks back in September by introducing the state guarantee scheme following an all-night crisis meeting.
Just two months earlier, the AIB "lifer" had astonished the markets by raising the bank's dividend despite the gathering financial storm clouds.
The fact that he previously spent about €2.4m of his own money to buy shares in his bank would certainly suggest that he just didn't see the crash coming. He received a vote of "full confidence" from the AIB board in January but took a 45pc cut in his pay package to €1.15m last year.
Dermot Gleeson - chairman
Dermot Gleeson replaced Merrion Hotel owner Lochlann Quinn as chairman at the end of 2003.
The 61-year-old had been a well-known member of the bar since he became the country's youngest senior counsel at the age of 30.
The Fine Gael supporter served as attorney general in the rainbow coalition government until 1997.
His links with Allied Irish Banks were cemented when he represented AIB during the Public Accounts Committee hearings into its role in encouraging withholding DIRT payments. He received fees of €475,000 in 2008 and 2007. He will resign in July.
John O'Donnell - finance director
Like Sheehy, finance director John O'Donnell was another internal appointment.
Named finance director in July 2005, he presided over the bank's lending splurge from January 2006 after previously serving as the head of investment banking.
His tenure saw the bank lend to home buyers and developers, although it shunned 100pc mortgages popular with rivals.
He was perhaps lucky that the bank's attempts to buy the EBS and Irish Nationwide at the top of the market both failed.
Last month, O'Donnell was forced to double loan loss provisions to €2.9bn. His total pay was €658,000 this year, down 48pc from his 2007 figure. He will retire in August.
Dan O'Connor - chairman designate
Dan O'Connor will become the bank's new chairman in July.
It's another interesting development in the life of the 49-year-old former GE Money head, who has sat on the board of AIB since 2007 and CRH since 2006.
Mr O'Connor served as president and chief executive of GE Consumer Finance's Dublin-based European operations until two years ago and many assumed that he was no longer interested in senior financial jobs.
A chartered accountant, he holds a commerce degree from University College, Dublin.