AIB to be reorganised into a single business

AIB is to reorganise itself into a single business in what the bank called the most challenging change programme it has ever undertaken.

It is also reshuffling its top management. Executive chairman David Hodgkinson said he is “hopeful” that the bank will have a new chief executive by late in the third quarter or early in the fourth quarter.

AIB will operate as a single bank instead of a collection of separate businesses.

The bank’s current “divisional structure” is being replaced by an “integrated bank” with three units: personal and business banking; corporate and institutional banking, and commercial banking.

It said its consumer operations in the Republic and Northern Ireland “will be more aligned”.

Mr Hodgkinson said the bank has identified a number of potential candidates for the chief executive role but has not drawn up a shortlist yet.

Colm Doherty, the bank’s former managing director, left the company in November.

As part of AIB’s management reshuffle chief financial officer Bernard Byrne will become director of personal and business banking and will be replaced on an interim basis by Paul Stanley, currently group financial controller.

Jerry McCrohan, AIB’s head of capital markets, takes over as director of corporate and institutional and commercial banking, while Peter Spratt, a partner at auditors PricewaterhouseCoopers, becomes head of the non-core unit.

PwC director Stephen Bell becomes acting chief risk officer, while Joe O’Connor continues as chief credit officer.

“We’re still in an early stage of deciding quite how we manage thatvirtual process, but there will be appropriate corporate governance processes,” Mr Hodgkinson said.

The bank’s British business will stay in the core bank, while its 24.99% owned life and pensions joint venture with Aviva “remains at the moment” a core business, he said.

The bank said work is under way to merge AIB and EBS, and is progressing well.

Meanwhile, credit ratings agency Moody’s downgraded AIB’s dated subordinated debt by one level to C from Ca. The rating company also cut the lender’s undated junior debt and Tier 1 instruments to C from Ca.

The downgrades follow AIB’s plans to buy back subordinated debt “at very high discounts”, it said.

AIB, which is 93% government-owned, was ordered in March to raise an additional €13.3bn to shore up its reserves against soaring real-estate loan losses.

The lender has appointed PwC’s Mr Spratt to oversee the running of a non-core unit that will “house, manage or dispose of selected assets” for the next two years.