AIB picks Galvin as finance chief as hike in dividend planned

Donal Galvin has been chosen to replace Mark Bourke, who is departing AIB to join Portuguese lender Novo Banco

AIB is understood to have selected Donal Galvin as its next chief financial officer (CFO), as the bank prepares to announce a planned dividend hike next week what would result in an estimated €290 million payment to the State.

The bank's board, led by chairman Richard Pym, is said to have alerted financial regulators of its intention to appoint Mr Galvin (45), currently deputy CFO, to the top finance role. The Central Bank of Ireland and European Central Bank will ultimately have to approve the nomination.

Mr Galvin is primed to succeed current CFO Mark Bourke, who is due to join Portuguese lender Novo Banco in the coming months, having signalled his departure more than five months ago.

Spokesmen for AIB and the Central Bank and Mr Galvin, who joined the group in August 2013 from Japanese investment banking and trading group Mizuhu Securities, each declined to comment.

AIB, which resumed dividend payments two years’ ago, will publish its full year’s results on March 1st. The bank is expected to unveil plans to hike its dividend to shareholders by about 25 per cent to €407 million, according to the consensus estimate among analysts.

The State, which remains a 71 per cent shareholder as a result of its bailout of AIB during the financial crisis, would be in line to receive almost €290 million.

Still, Davy analysts estimated in a note published on Monday that pre-tax profits at the country's second-largest retail lender by assets would decline to €1.24 billion last year from €1.31 billion for 2017. The figure for the previous year was flattered by gains from the disposal of bonds and a positive recalculation of cash flows from previously-restructured property loans.

Non-performing loans

AIB is forecast to have cut its non-performing loans (NPLs) ratio from 16 per cent of gross loans to below 10 per cent over the course of last year, accelerated by the sale of €1.1 billion of problem buy-to-let and commercial property loans to a consortium led by US distressed-debt firm Cerberus.

The group currently has another portfolio, containing €3.4 billion of NPLs and called Project Beech, on the market, with Cerberus and rival investment firm Lone Star reported to be among the final bidders.

A deal is likely to be concluded before the end of June, which would help AIB reach its stated aim of lowering its NPLs to the European average of 3.5 per cent by the end of 2019.

The ECB’s banking supervision arm has been pressing euro zone banks with high levels of troubled loans to implement credible plans to cut their NPL ratios to the EU average.

Meanwhile, AIB is still waiting for regulators to formally approve its appointment of internal candidate Colin Hunt as the group's next chief executive. He was unveiled before Christmas as the successor to Bernard Byrne, who is set to join stockbroking firm Davy as head of its capital markets division.