Clearout at AIB finally spells a new beginning

NOW that we have forced the resignation of most of the top bankers deemed responsible for the collapse of the banks and the virtual destruction of the economy as we knew it, we still have key issues to resolve.

In the case of the top brass at AIB it was probably inevitable they would have to go in the sweep out, while the earlier insistence of outgoing chief executive, Eugene Sheehy, that the bank did not need outside funding or support from the State seemed to defy both common sense and logic.

It showed a complete disconnect with the reality of what was going in his own and other banks, both locally and internationally.

In time, Sheehy was proved totally wrong and despite his pledge to work for the next six years for a flat salary of €700,000 a year, he is now on his way out of what was the biggest banking job in the country.

As the crisis broke last year, he also took an antagonistic position to the whole bank rescue process.

As the environment worsened he found himself confronted by a hostile media who previously hung on his every word.

In Sheehy’s case the fall from grace is a bit harsh in one sense.

Highly respected among his peers, he was regarded as the best man for the job to take over from Michael Buckley.

As the country became more hostile in the wake of the collapse of the Irish banks, Sheehy mellowed and graciously told the great unwashed he was very appreciative of the €3.5 billion in taxpayers’ money from the State.

His announcement last week that the bank would require a further €1.5bn, sealed his fate.

In the end it seems the Irish Association of Investment Managers became the trigger for his resignation.

It followed a letter from chief executive, Frank Dwyer informing the bank’s chairman, Dermot Gleeson, of his association’s concern with the bank’s handling of the ongoing banking crisis.

It was also made clear that IAIM would not be voting for their re-election, which helped the process to the next stage.

From a Government standpoint, Finance Minister Brian Lenihan would have lost some credibility had Sheehy stayed in his job,after other bank chiefs had exited stage left.

Had the IAIM not stepped in it was expected that Sheehy would have gone anyway.

On a personal level, it is probably rough justice for a banker who commanded the respect of his colleagues and whose appointment was generally welcomed within the bank.

This crisis has shown no mercy to the economy or to those in charge of the purse strings and some would say rightly so.

It is time to start looking to the future. We’re running out of time and indulging in recrimination and bashing what’s left of the Irish banks is not what’s required.

On that front the new chairman, Dan O’Connor, is well regarded in international banking circles and has the capacity to drive the bank forward to a position of strength.

That may be getting a bit too far ahead of where we are right now and the thorny question of how the new toxic bank will finally resolve itself remains a key talking point.

How to value the assets of the banks in non-existent markets is a hard task.

During the week Davy Research urged we move away from the market approach, something that has been urged in this forum on a number of occasions in recent weeks.

Property watcher Conor O’Brien, who is a chartered surveyor, has been pushing that approach also. That issue has to be nailed down before we can move on.