No chief executive, but a brand new structure

AIB does not have a chief executive, yet last night announced the blueprint for its new banking structure that reduces its two coredivisions serving Ireland and Britain.

At home, the bank will include three units under AIB Group: personal and business banking, corporate and institutional banking, and commercial banking.

Chief financial officer Bernard Byrne becomes director of personal and business banking for the group, while AIB veteran Jerry McCrohan, managing director of AIB Capital Markets, will head both corporate and institutional, and commercial banking.

AIB said its British unit will be managed separately as it seeks to align its First Trust operations in Northern Ireland closer to the main Irish division.

Previously, the group had four separate divisions that included the US (M&T), Britain, Poland and Ireland.

AIB sold its US minority stake of 25% in M&T last year and has also sold off its Polish operations, a highly profitable part of the group.

Plans to sell off the investment management business are understood to be afoot to complete the restructure.

As the clean out continues, three directors on the board elected prior to the collapse of the bank in 2008 said they will not stand for reelection at the July AGM.

This means the remaining board members, including Michael Somers, the former NTMA boss and Jim O’Hara of Intel are all part of the new guard.

Dick Spring, the former Labour leader is a public interest director appointed by the previous government.

The changes reflect the intentions of our European masters who made it clear, even before the bailout was agreed, that Irish banks would be reduced to serve the retail and business sectors of the Irish economy.

The other condition was that no bank could ever be allowed get so big that they could jeopardise the banking system or the financial stability of the state.

One can argue that the bank has got the process backwards by putting in place the new structures without having a full-time chief executive to fill the gap left by Colm Doherty, former head of AIB Capital Markets, regarded as the best managed part of the bank in the run up to the collapse.

In effect, the current divisional structure is being replaced by an integrated bank in Ireland with Britain representing the second arm of the business.

AIB’s executive chairman David Hodgkinson said the changes were part of the “most challenging” programme AIB has ever undertaken. “It demands new and energetic leadership that will set the agenda to drive AIB to become a very different bank and enable it take on its identified role as a pillar of the Irish banking sector,” he said.

“AIB will move from a model of entirely separate businesses to a ‘one bank’ model.”

Part of the restructuring requires 2,000 job cuts over time, the group said when announcing its 2010 results.