THE TOP brass at AIB faced tough questioning and an egg attack as the Government’s €3.5 billion investment in the bank was approved and the AIB board was re-elected after two lengthy and angry shareholders’ meetings.
Despite heated exchanges with the bank’s chairman, Dermot Gleeson SC, shareholders voted overwhelmingly for the State’s recapitalisation of AIB and the re-appointment of 12 directors later at the annual meeting.
The Government invested the €3.5 billion yesterday afternoon shortly after the deal was approved.
Mr Gleeson said that AIB regretted the bank’s lending to property developers and apologised unreservedly for the “anxiety and distress” shareholders had suffered.
Shareholders have seen more than 90 per cent of the value of their investments wiped out, as the bank has lost €20 billion in value from the collapse in the Irish property market and the banking crisis.
AIB has set aside €4.3 billion to cover losses on loans, primarily to Irish property developers, an increase from €1.8 billion in 2008.
The three top bankers at AIB – Mr Gleeson, chief executive Eugene Sheehy and finance director John O’Donnell – are retiring later this year over the bank’s loan losses and repeated miscalculations on the level of capital needed by the bank.
Minister for Finance Brian Lenihan said he “expects to be consulted on their replacements”. He said he supported “these developments as part of the ordered change in the board membership over a sensible but not overly protracted period of time”. Mr Lenihan said he would shortly name two more directors to the board of the bank as agreed under the recapitalisation deal.
Mr Sheehy told shareholders: “The real mistake, for which I take responsibility, is that we lent too much for development land in Ireland.”
Mr Sheehy said the development loans, which amount to 8 per cent of AIB’s €129 billion loan book, were “the single point of failure” leading to the shareholders’ losses and the reason for his retirement.
He said that the loans were “too much, at the wrong time, in a [global economic] shock that was more severe than a one-in-25 years or one-in-50 years shock”.
Mr Gleeson said that his retirement was “the correct thing to do” as shareholders were “entitled to a clear signal of accountability”.
Shareholders expressed anger at the meetings, which each lasted more than three hours and were attended by almost 1,000 shareholders. Several complained that pensioners had lost dividends that paid for their nursing home fees.
Shareholders criticised AIB’s board and management over their property lending and stewardship of the bank during the crisis. Mr Gleeson was hit by two eggs thrown by a shareholder, Gary Keogh, shortly after the extraordinary general meeting to approve the recapitalisation began at 10am.
Mr Keogh (65), from Blackrock, Co Dublin, told The Irish Times he lost €18,000 recently on an investment in AIB, which he had hoped to use as part of his pension.
Susan Kelly from Dublin, who with her husband have lost a large investment in AIB, said the pain shareholders were feeling was “real” and “unbelievably breathtaking and life-taking in some circumstances”.
“You were the financial foundation of the State and you have pauperised a generation,” she said.
A representative of financier Dermot Desmond, an AIB investor, told shareholders it was not a time for recriminations. “It is a time for resurrection, not destruction,” said John Bateson, finance director of Mr Desmond’s investment firm, IIU.