AIB executives to step down

AIB’s managing director and executive chairman are to step down, the bank announced today.

Colm Doherty, who took up the role as managing director last November, will leave before the end of the year. Executive chairman Dan O’Connor is to step down in the coming weeks.

The announcement came after the Central Bank this morning said the amount of equity capital the bank needed had risen from €7.4 billion to €10.4 billion, following an assessment by the Financial Regulator of AIB’s potential losses on loans transferred to the National Asset Management Agency (Nama).

About €5 billion of this will come from the disposal of assets, while the remaining €5.4 billion will come from an equity capital raising that will begin in November. This is expected to be completed before December 31st.

The State is expected to put an additional €2 billion to €3 billion on top of the €3.5 billion invested in bank last year, which would give it a majority controlling stake in the bank of about 90 per cent.

AIB said, if necessary, the National Pension Reserve Fund Commission would contribute up to €3.7 billion for new ordinary shares from its existing cash resources and by the conversion of up to €1.7 billion of the existing preferences shares held by the NPRFC.

Speaking this morning on RTÉ radio, Minister for Finance Brian Lenihan said the State would have to invest in the bank, and changes would be made at management and board level.

"It will, I believe, result in a substantial gain to the taxpayer over time as the bank is restored to its proper position," he said.

The bank has already begun to sell off some assets as part of the capital raising plan. Earlier this month, it said it was selling its Polish interests to Santander, which will raise about €2.5 billion. It is also seeking to sell its 22.5 per cent share in US bank M&T, and also its UK assets, including First Trust Bank in Northern Ireland.

Shares in AIB earlier plunged by 23 per cent, but by 4pm were trading 5.8 per cent off on the Irish market to 52 cent. Bank of Ireland was trading up 9.8 per cent at 62.6 cent a share.