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Inside the world of business

Anglo chief executive Aynsley linked with AIB top job swap

THE TAKEOVERS of EBS building society by AIB to form one of the State’s two “pillar” banks yesterday and that of Irish Nationwide Building Society by Anglo Irish Bank to form the country’s most toxic bank means a reshuffling of managers and new reporting lines.

The new Anglo-INBS entity will be known as Irish Bank Resolution Corporation or IBRC – a name which first appeared in these pages more than three weeks ago.

Chatter that IBRC stood for “Irresponsible Banking, Reckless Credit” as a nod to past practices at both lenders proved unfounded.

EBS chief executive Fergus Murphy will now report to AIB executive chairman David Hodgkinson and Irish Nationwide chief Gerry McGinn to Anglo chief executive Mike Aynsley.

McGinn will continue to run the Irish Nationwide business for Aynsley, with all the building society’s senior executives still reporting directly to him.

But there may yet be further changes. Aynsley is understood to be among the final candidates to take up the vacant chief executive seat at AIB, though he declined to comment when asked about this.

Hodgkinson said in May that the bank expects to appoint a new chief executive in late September or early October and the London headhunting company Korn Ferry has been busy carrying out a trawl of prospective candidates.

Aynsley would be swapping the top job at one nationalised bank for the top job at another. AIB said yesterday that the State would end up with 99.8 per cent of the bank as it will provide whatever capital it requires that it cannot realise from subordinated bondholders.

The capital bill for the merged AIB/EBS entity stands at €14.8 billion – AIB required €13.3 billion and EBS €1.5 billion prior to the merger.

Combined, and adding the €7.2 billion of State cash already pumped into AIB, this is still well shy of the €29.3 billion that Anglo has absorbed.

Aynsley may even be able at AIB to resurrect his good bank/bad bank plan that was rejected by the Government at Anglo.

Look away now, France

THE LATEST Eurostat numbers for foreign direct investment (FDI) into the EU are not likely to help the case for a cut in the Irish bailout interest rate.

Once again Ireland has done extraordinarily well, coming second in the EU in terms of net FDI, with €14 billion after the UK which received €16 billion.

It is good news, but the figures will do little to soften the Elysée’s opposition to any change in the interest rate on Ireland’s loans from the EU without some sort of concession by Ireland on corporate taxation.

France, by comparison, was a net investor with the rest of the world investing €15 billion abroad. But what is most likely to catch the eye of Christine Lagarde’s successor is the gross figures.

Total investment in Ireland from outside the EU was €21.5 billion, of which €8.3 billion came from the tax-conscious Americans. Gross inward investment into France from outside the EU was only €8 billion, of which a mere €200 million came from the US.

Put another way, US firms invested almost as much in Ireland last year as the rest of the world invested in France.

It goes some way to explaining why the French are digging their heels in on the issue of corporation tax.

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Next Week

Exchequer returns for the first half of the year will be published.