Scandal sure to get more air-time at AIB talks

THE foreign exchange scandal that rocked AIB is bound to get further air-time at today’s annual general meeting.

It is almost inevitable. How can the bank that pledged to fight Séamus Sheerin all the way reach an out-of-court settlement.

The Faldor scandal implicating former AIB executives, including Roy Douglas, and former chief executive Gerry Scanlon, in tax evasion was yet another blot on the corporate integrity of the bank.

Perhaps shareholders will be given further insight into those matters today, but it seems unlikely given its desire to keep Mr Sheerin out of the courts.

Today’s AGM marks a period of transition. It will be Michael Buckley’s last as chief executive. “Give me lucky generals,” Napoleon used to say. He did not trust skill, or training, or brains. He didn’t really know why some generals won and some seemed to lose. He chose the lucky ones. His luck ran out at Waterloo.

Mr Buckley, who was and is highly regarded both within and outside the banking community saw his luck run out early in his tenure and he spent his time mopping us disasters not of his making.

From the $690m Allfirst debacle down to the current-day investigations into the foreign exchange, Mr Buckley could be forgiven for thinking that he was not a lucky general.

Against that, the economy is set to continue to grow at a pace faster than most would have expected after the Celtic Tiger phase ended abruptly when the dot.com bubble burst in the US. Growth for the next few years will be 6% or higher unless oil prices destabilise the recovery in the US.

In that sense, AIB has no worries. Its core Irish market will continue to offer substantial earnings potential.

Even after the Rusnak affair, it bounced back and the other scandals have done little to dampen its rating.

In that sense, luck has been with the bank despite the public outcry over its treatment of customers and its role in tax evasion and the other scandals that have been a key theme as the bank in the past few years.

At the time of going to press the bank was forced to deny it paid Mr Sheerin a €1m settlement, which sets the issue up again for today’s meeting.

Of greater interest has to be what direction incoming chief executive Eugene Sheehy will steer the bank in the next few years. AIB has sold its majority stake in Allfirst despite denying it would for a long time. It looks set to sell Ark Life and, according to its own brokers, will not engage in any further major deals in the home market.

Poland looks to be the last major overseas player for the bank.

AIB has a shortfall in its pension fund of €833 million that employees will want addressed.

While that exposure remains the bank in its annual report flagged that its outgoing chief executive will walk away with a pension of €516,0000 a year. It also emerged that former boss of the group’s US operations, Jerry Casey, long retired, got €84,000m under a special consultancy deal he has with the bank in 2004. At the time of his retirement Mr Casey was the best-paid executive in the country’s largest bank. The going rate in the US was about $1m a year at the time. The deals look generous in the extreme at a time when ordinary customers feel seriously short-changed.