'Very grim day' for AIB as Byrne quits for Davy
AIB shares closed down more than 2.6pc today, clawing back steep early losses, with the shock defection of chief executive Bernard Byrne to Davy rattling investor nerves.
The stock was down 10pc at one stage - with chairman Richard Pym saying it was a “very grim day in my life when Bernard told me that he had an external opportunity which he wanted to pursue.”
The comments have served to underline Mr Pym’s recent criticism of pay restrictions imposed by the Government on the bailed-out bank. Mr Byrne will not be subject to the caps at Davy, where he will become deputy chief executive and replace well-known stockbroker Kyran McLaughlin as Davy’s head of capital markets.
Analysts said investors were shocked by the news. Chief financial officer Mark Bourke is also leaving the bank, while Myles O’Grady, a senior lieutenant of Mr Bourke in the bank’s finance department, recently departed for Dres Properties which is lining up a stock market flotation.
There has been speculation that Davy itself might be considering a flotation - for which Bernard Byrne’s experience of the recent AIB IPO may have proved useful. But a company spokesman insisted: “The current ownership model has served Davy well and we have no plans to change to it.
Owen Callan, an equity analyst at Investec, said the slew of departures suggest that the bank “is struggling to retain high-quality staff and senior management in the face of what is obviously a very tight labour market.”
He added that Mr Pym’s strong comments “wouldn’t have helped” in terms of the sell-off of AIB shares yesterday but that they would have conveyed to the market and Government Mr Pym’s unhappiness with the restrictions.
Darren McKinley, senior equity analyst at Merrion Capital, said FBD boss Fiona Muldoon would be a credible replacement and “an appointment that might ease investor concerns.” Another potential candidate is Tomas O’Midheach - recently appointed deputy chief executive. Mr O’Midheach has been at the bank since 2006, holding roles including chief operating officer and chief digital officer.