AIB warns on EU negotiations

 

AIB chairman Dan O'Connor today said the bank could face "serious consequences" from negotiations with the European Union over the Government's capital injection into the lender.

"We have seen what's happened this week in terms of" ING Groep NV, Mr O'Connor said at the Irish Bankers Federation conference in Dublin today, referring to EU demands on the Dutch financial-services company.

"Draconian measures have been taken," he added.

ING agreed earlier this week to EU demands that it sell its insurance units to secure approval for a state bailout.

The commission is reviewing bailouts to ensure banks that get government money don't have an unfair advantage. AIB, which received €3.5 billion in State funds this year, expects three to six months of active negotiations with EU authorities once it submits its restructuring plan, according to Mr O'Connor.

"We don't know what's going to happen to our organisation but certainly it's going to have serious consequences," he said. He declined to comment on the potential consequences, adding that markets were "surprised" by the ING decision.

Allied Irish rose 3.8 per cent to €1.92 in Dublin today, after dropping more than 20 per cent over the previous two days. Bank of Ireland jumped 12 per cent today.

Bank of Ireland filed a restructuring plan with the European Commission, the EU's executive arm in Brussels, in September, and there is speculation that AIB may submit its plan next month.

Mr O'Connor told reporters at the conference this morning that AIB is in "good dialogue" with Minister for Finance Brian Lenihan on the appointment of a new chief executive officer.

Bloomberg