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| AIB Bank Centre, Dublin |
AIB Bank (Allied Irish Banks, p.l.c) Ireland's biggest bank announced today that the Chairman, Group Chief Executive and Group Finance Director are to resign.
Earlier this month, the Minister for Finance Brian Lenihan announced plans to establish a State agency to be known as the National Asset Management Agency (NAMA), which will acquire toxic property loans from Irish banks.
Davy Stockbrokers' analyst Emer Lang commented earlier Thursday: Irish banks: haircuts not styled purely on property values: "Speculated haircuts of 'up to 50%' appear to be based on expectations of peak-to-trough property value declines in this cycle (and to some extent a populist desire to penalise the banks/developers as much as possible) rather than on any considered analysis. Gauging the appropriate haircut is a function not just of the asset value; rather, it also hinges on the original loan to value (LTV), the vintage of the loan and the provisions made. Our analysis suggests a range of mark to market haircuts: from as low as 5% for loans backed by UK commercial investment property to 44% in the case of loans backed solely by Irish development land. Our approach produces haircuts of 15% for Bank of Ireland and 20% for Allied Irish Banks assuming 'economic' as opposed to 'market' values.
Our analysis suggests that to restore our 'cleansed' banks to even modest profitability in 2010 will require some tough cost measures. Restoring the banks to more meaningful profits so that they can play a pivotal role in Ireland's economic recovery will require more far-reaching cost initiatives.
TNAV (total net asset value) estimates continue to hinge on a number of key assumptions: the loan haircut, the level of capital raised, government ownership and the 'cleansed' banks' earnings power, which can be driven by costs. Uncertainty over these issues may persist for some time, but our 'base' case implies price/TNAVs of around 0.5x for both banks."
AIB Group Chairman, Dermot Gleeson, has announced that he is to stand down from the post in July this year. He has been Chairman for six years.
Dan O’Connor, who joined the AIB Board in 2007, will succeed Gleeson as Chairman and David Pritchard, who joined the Board in 2007, has been appointed to the new post of Deputy Chairman. Pritchard will take up his new role on 14 May.
AIB said Eugene Sheehy, AIB Group Chief Executive, has also informed the Board of his intention to retire. A process will be put in place immediately to identify and appoint his successor in the coming months. Mr Sheehy will continue as Chief Executive until his successor is appointed.
John O’Donnell, AIB Group Finance Director, has announced that he is to retire from the company in August this year.
The process to identify and appoint successors for both Sheehy and O’Donnell will consider both external and internal candidates for the positions.
As previously advised to shareholders, the above mentioned Directors will all seek re-election to the Board at the forthcoming AGM on 13 May.
AIB said it has consulted with the Minister for Finance and the Minister has conveyed his good wishes to the new Chairman and Deputy Chairman.
