The announcement of the 50-year-old’s appointment as successor to AIB chief executive Michael Buckley by AIB chairman Dermot Gleeson came as no surprise yesterday.
The markets did not react well to Mr Sheehy’s appointment. AIB shares fell 27 cents to €15.63, a 1.70% drop. The fall wiped €233.8m off the value of the company which has a market capitalisation of €13.54 billion.
Mr Sheehy who takes up his new post in April is chairman and chief executive Mid Atlantic Division, M&T Bank and while technically an outsider he has been an AIB man for more that 30 years. AIB chairman Dermot Gleeson said choosing the right person to succeed a chief executive of Michael Buckley’s calibre was a difficult task.
“However, in reaching our decision we were greatly assisted by being able to choose from an outstanding field of both internal and external candidates.
“Eugene will bring a valuable mix of internal and external experience to the role. He combines a 30-year career in AIB, during which he held a variety of key posts, with three years working at the very highest levels in M&T, one of the most successful banks in the US,” he said.
The key factor which swung the job Mr Sheehy’s way may have been his ability to answer with clarity what the company should do with its €2bn-plus shareholding in M&T Bank.
Mr Sheehy’s slick handling of the off-loading of Allfirst to M&T Bank for close to €800m along with a 22.5% stake in the enlarged entity marked him as a man for the future. In a way, the board of AIB owned him a debt for delivering them from the All-First debacle and this week they repaid it.
Stuart Draper, head of research at stockbrokers Dolmen Butler Briscoe who has a hold recommendation on AIB shares, said: “The Rusnak tidy-up operation was a feather in his cap. Having come up through the ranks he knows the business inside out.”
Mr Sheehy will be handsomely rewarded in his new post with a pay package of around €1.5m and he will also have the legacy of a significant holding in M&T, from his years in the US. He was paid €386,965 while employed by M&T in 2003.
The general secretary of IBOA Larry Broderick warmly welcomed the appointment of Mr Sheehy and wished him well: “IBOA has worked closely with Mr Sheehy. He was pivotal in establishing the successful partnership process between AIB and IBOA. IBOA looks forward to engaging with Mr Sheehy and using the agreed partnership principles in addressing the cultural issues that have come to the forefront in the past year.”
Last month AIB announced pre-tax profits of €1.4bn for 2004, a rise of almost €400m on the previous year.