AIB's chief executive Colin Hunt describes himself as a "young man in a hurry". So do many CEOs, but few hit the summit of their career ambitions at the age of 28, as Hunt did when he became chief economist of one of Ireland's largest stockbrokers.
Joining the Irish bank just over two decades later necessitated a slower pace, grappling with the challenges familiar to every CEO who has tried to turn around a big unionised ship.
Then Covid-19 appeared, and with it came something of an epiphany.
“If we’d had 18 months to prepare for this . . . we’d have hired consultants, we’d have had steering committees,” says Hunt in his modern office with sweeping views of Dublin.
Instead, they had to act, “navigating in complete darkness”, recalls Hunt. And it worked.
AIB, which Hunt joined as head of wholesale in 2016 and became CEO three years later, returned a loss of just €700 million last year after taking €1.4billion of charges for loans that could go bad, largely because of the pandemic. The bank is already back in profit in the first quarter, as it reaps the early benefits of a €150million cost-cutting plan introduced last December.
“It [THE PANDEMIC]made me more comfortable in my view that we could drive very significant transformational change to the organisation at pace,” says Hunt, though he acknowledges that some changes were driven by wider industry and societal forces as Covid restrictions upended how consumers engaged with banks, and how people worked.
The most immediate benefit for AIB was a sharp increase in the (more profit-friendly) business of people preferring online apps to visiting branches. The percentage of accounts opened on mobile devices has more than doubled since the first quarter of 2020, digital wallet payments are up more than 300 per cent over the same period, and the average number of people going to a branch each day has fallen 30 per cent.
A shift to “hybrid working” means AIB now believes it needs just three Dublin head office locations versus the six it had pre pandemic, as staff divide their time between working from home and working from the office. The bank has already exited one building and expects to leave two more “over the next few years”.
AIB’s pandemic wasn’t without its challenges. Profitability targets were pushed out by a year. The bank, in which the Irish State retains a 71 per cent stake after injecting billions in bailout cash in 2009-2010, provoked a public and political backlash for suspending mortgage applications for those who were on Covid-related benefits, such as Ireland’s pandemic unemployment payment (PUP).
A letter from Hunt to the Department of Finance, which holds AIB's shares on behalf of the Irish government, described the situation as "regrettable". "It is inevitable in positions like this that you, with the benefit of hindsight, can make mistakes," says Hunt, whose varied career path includes stints as a special adviser in Ireland's Department of Transport and Department of Finance. Still, he defends AIB's approach as "prudent and conservative".
AIB's core business of lending to Irish households and businesses was also put in an unflattering spotlight internationally when Belgian lender KBC and Royal Bank of Scotland announced plans to pull out of the Irish market because it was unprofitable. "We don't have an alternative home, we've got to make this market work," says Hunt.
He is promising a return on tangible equity – a key metric on how much a company is making from its resources - of more than 8 per cent by 2023. That is well below the mid-teens targeted by some European banks but enough to drive a doubling of the bank’s share price in the past year, though it is still valued at just over half its net assets.
Hunt, who worked from the office throughout the pandemic and recalls the “scary” sight of Dublin’s deserted city centre, was adamant from the start that AIB must remain focused on the medium and longer term even as it was caught in the eye of the crisis.
In the past few months, the bank has announced a string of acquisitions including his former employer Goodbody and the corporate banking business of departing Ulster Bank. Hunt is also putting the finishing touches on a life insurance joint venture with Canada’s Great-West Lifeco.
The ‘transformation plan’
Those fill in the significant gaps that 50-year-old Hunt saw when he became CEO just over two years ago. For some, it could be “job done”. Not Hunt, who speaks of leading AIB as a “privilege” and one he never imagined would be his. His immediate focus, and the one he is keenest to talk about, is “the implementation of the transformation plan” his team announced in December, with its 1,500 job cuts, handful of branch closures and the exit of small business lending in Britain.
Getting the government off AIB’s share register is clearly high on his to-do list though he is too diplomatic to be explicit about it, stressing that the timing of any sale is entirely within the state’s gift. The state has shown little inclination in the four years that have passed since they raised more than €3bn by returning AIB to the public market. The day of a final sale will be a “very very important” one because “it will be a signal that the bank is advancing along the path to full normalisation”.
Another sign of normality would be removing the €500,000 pay cap in place for all of Ireland’s bailed out banks, and getting rid of an 89 per cent bonus tax that effectively bans Hunt and other CEOs from rewarding performance with one-off payments.
Hunt acknowledges that a post-Brexit influx of new financial employers who can pay bonuses and big salaries has been challenging. AIB’s pitch is that “the experience you can get here will be richer and more varied than you can get in any other financial services firm in the state”. It’s been effective so far, Hunt says, with a survey of 10,000 graduates ranking AIB 12th overall and the most popular Irish company.
Hunt’s own motivations are more complex than the breadth of experiences the bank is selling to junior staff. Towards the end of our interview, he turns pensive, revealing that his 37-year-old father drowned in an accident the night before Hunt was born. A childhood spent “on the back foot”, defined by his father’s absence, made him determined to make the most of his education, so he could be “impactful”. The sentiment remains with him, now he is married with three young daughters. They have given him a “far far longer time horizon than I would have had as a single man”.
Through that lens, running Ireland’s biggest bank is a good fit for now, and possibly for quite some time to come. “I can think of very, very few roles in an Irish context that are more impactful and that can deliver more positive enduring change than being CEO of AIB.”
Three questions for Colin Hunt
If you were not a CEO/leader, what would you be?
When I was a very young boy, I dreamt, like so many others, of being an airline pilot. But if I hadn’t taken the path to the role of CEO, I would most likely have worked in the education or infrastructure spheres.
Who is your leadership hero?
Paul Polman. As CEO of Unilever, he managed to expand the business profitably while substantially reducing its environmental impact. He showed that you can build a business and deliver sustainable results for all stakeholders by focusing on the long-term, best interests of the customers, economies and societies you serve.
What was the first leadership lesson you learned?
Just because you wear the stripes, doesn’t mean you’re a good leader. No matter what role you occupy in an organisation, if you are given the opportunity to bring about positive change, you must seize it. – Copyright The Financial Times Limited 2021