Cliff Taylor: David Duffy departure awkward for AIB

David Duffy's decision to depart from the top job at AIB comes at an awkward time for the bank and for Minister for Finance, Michael Noonan. Just a week ago the government appointed Goldman Sachs as advisers to look at the options for the bank and the expectation is that the bank's capital will be restructured this year with the Government starting to sell down its shares after that. The only upside for the Minister is that if Duffy was going to go, it is better that it goes now rather than, say, a few months before the State plans to go ahead and starting selling some shares.

Duffy joined the bank at the end of 2011 and, given his wide international experience, it was always thought that he would stay for a limited period. The bank has dealt with a lot of the legacy crisis problems, undertaken a major cost cutting programme and moved back into profitability on his watch . Considerable internal restructuring has taken place, including the appointment of a largely new management team.

When Duffy signed a permanent contract last summer this seemed to indicate that he would see out the restructuring process and the start of the sell-down of state shares, at least. He is now to move to Scottish bank Clydesdale, a subsidiary of National Australia Bank, where - presumably - he will be paid significantly more than the €546,000 he received from AIB last year.

While Duffy will stay on for a period, inevitably there will now be some delay in the key decisions facing the bank in relation to restructuring its capital. Goldman Sachs, the bank and the government can push forward with preparations, but inevitably timing will slide until a new chief executive is in place. There had already been speculation that the first sale of the state shareholding might now happen in early 2016, rather than the second half of this year as had initially been thought.

The board, chaired by Richard Pym, will now be under pressure to get a successor appointed reasonably quickly. The €500,000 government imposed pay cap has been seen as a barrier to attracting major talent in the mega-salary world of international banking. This time around there are a number of possible internal successors to Duffy and appointing one of these would allow a quicker appointment and guarantee continuity. However the board will also need to be seen to go through the process of looking outside as well.

Either way, the new boss will have to hit the ground running with a key period facing the bank where it undertakes a major financial restructuring and starts what will be a gradual move back from public to private ownership.