Top executive admits bank could have done better
It was a time for mea culpas with both the chairman Dermot Gleeson and outgoing chief executive Eugene Sheehy accepting responsibility for the mess the bank now finds itself in.
Two days ago in a trading update it said it expected bad debts of €4.3 billion, well above the earlier figure indicated in March of €4bn, in what it then said would be a worst case scenario.
In the bank’s defence, the chairman told shareholders, the earlier projections were based on the best figures available at the time.
He said the change in sentiment had been dramatic, reminding shareholders that last July the ECB had raised interest rates to 4.25% as oil hit a new record of $147 a barrel and the global and Irish economy continued to boom.
In his prepared statement he said “with hindsight I regret some of the lending decisions that were made, particularly in relation to property development here in Ireland.”
Most of all he said he regretted the impact those decisions have had on ordinary shareholders, who now own 50% of the bank’s shares.
Mr Gleeson was not cowed by the ferocity of the criticism levelled at him from the floor and said it was “nor realistic” to think the bank could have emerged unscathed from the collapse of the global economy.
It was too simplistic to pin the blame on any one cause.
“The executives could have done better, but the enormity of the global downturn could not be ignored in any amassment of where the bank currently finds itself,” he said.
Speaking at the meeting, Senator Shane Ross said it was important that AIB did not appoint an “insider” to replace Eugene Sheehy as chief executive.
He said Bank of Ireland made an “appalling mistake” in appointing Richie Boucher to replace Brian Goggin.
He added the last thing we needed was continuity, and what was needed above all was change.
Mr Gleeson said Allied Irish is conducting an internal and external hunt to replace both Mr Sheehy and finance director John O’Donnell.
They were forced to quit their posts on April 30 after admitting the bank would need a further €1.5bn in equity on top of the €3.5bn pledged by the state.
Commenting on his role in the meltdown at AIB, Mr Sheehy, in response to shareholders demands for an explanation of what went wrong, said: “The real mistake, which obviously I take responsibility for, is that we lent too much money for development land in Ireland.
“It’s been at the front and centre of my mind every day.”
“We lent too much of it at the wrong time. That’s the honest to God truth,” he said to a rare burst of applause from the floor.
