Tuesday 12 December 2017

AIB boss Hodgkinson feared bank had 'every prospect of collapse'

claimied that
the bank
faced 'quite
Executive chairman David Hodgkinson claimied that the bank faced 'quite severe operational risks'

Laura Noonan

AIB boss David Hodgkinson feared the almost-nationalised bank had "every prospect of collapse" when he took the reins as executive chairman last October.

The Briton has spoken publicly of his fears for the first time in an interview with the Irish Independent, claiming that the bank faced "quite severe operational risks" and could have been taken over.

In the interview, Mr Hodgkinson also revealed that:

•He "thinks" the Central Bank will give the nod for a "debt-forgiveness" scheme to help mortgage holders -- but customers taking part will have to accept a "period of austerity".

•AIB has submitted proposals for a new "relationship framework" to govern its dealings with the Department of Finance to establish "who's calling the shots on what area".

•The 60-year-old has made no decision on when exactly he'll stop working with the bank, but he believes AIB ultimately needs a "domestic chairman".

•AIB is in negotiations with landlords to exit some of its office buildings at its Bankcentre campus.

The comments come after AIB reported losses of €2.6bn for the first half of 2011, after taking provisions of €2.9bn on loans going bad.

The bank has also reached an apparent stalemate with unions after protracted talks around a 2,000-strong redundancy programme stalled.

Mr Hodgkinson insisted that significant progress had been made at the bank since he took over.

"I came to an organisation that had every prospect of collapse," he said.

"AIB could have been taken over by someone else, we could have had a lot more people walking out the door. . . the operational risks were really quite severe."

More recently, AIB has won favour with the public by proposing a "debt-forgiveness" scheme that would see the bank writing off some borrowings owed by hard-pressed homeowners.

Mr Hodgkinson has repeatedly said that he would only go ahead with the scheme if it got clearance from the Central Bank. Asked if he thought that permission was likely to be given, he replied: "I think it is."

"It's not just that at the stroke of a pen, somebody wipes out something and you walk away scot free," he stressed.

"A customer has to be completely open and contribute to the resolution of their situation as far as they can. . . that means an element of austerity for a period. If their conduct is okay, then the slate may be wiped clean."

Mr Hodgkinson also confirmed AIB has been pushing for firmer guidelines on how the Government will interact with the bank it now owns 99.8pc of.

Proposals for a new "relationship framework" have been submitted to the Department of Finance to clarify where the lines should be drawn between the bank's board and the department.

"I'm not at war with the Government," he stressed. "I accept fully that if their agenda could be impacted by what happens with the banks [they should be consulted]."

Mr Hodgkinson also revealed that AIB is "talking to landlords" about ways to improve "our use of property from a cost point of view".

AIB now has several empty offices in Bankcentre and is expected to have even more free space once it moves forward with its redundancy plan.


Indo Business

Promoted Links

Business Newsletter

Read the leading stories from the world of Business.

Promoted Links

Also in Business