AIB IS sufficiently “well capitalised” following the injection of €3.5 billion in capital from the Government to ride out the current economic downturn, its chief executive has said.
Eugene Sheehy said while AIB “probably did not call the top of the property market in time” and had made mistakes, he would not resign because he retained the confidence of the board.
Looking back over some of AIB’s lending decisions, Mr Sheehy said: “I regret them, and I think we could have made better decisions.”
However, the bank's operations were "very broadly based", with half its profits earned abroad, he told RTÉ's Morning Irelandyesterday.
AIB was totally committed to its Polish unit Bank Zachodni WBK, he added, describing it as “an absolutely integral part of the bank”.
Unlike Bank of Ireland, which yesterday revised to €6 billion its worst-case scenario for impaired loans over the three-year period to 2011, AIB will not update its bad debt estimates until its full-year results next month.
Mr Sheehy described the transfer of €7 billion between Anglo Irish Bank and Irish Life Permanent as “disappointing”, but stressed it had no impact on AIB.
He said he was confident that, despite falls in AIB’s share price yesterday, he did not believe international investors “will extrapolate what’s happened in these incidents to us or to Bank of Ireland”.
Looking forward, Mr Sheehy said the next couple of years would be tough, but said Ireland should be among the first to benefit from a recovery in the world economy.
Discussions between the bank and the Government on the recapitalisation had been detailed and specified how much money would be put aside for small businesses and first-time buyers.
Mr Sheehy also said he has voluntarily taken a 25 per cent salary reduction and did not expect bonus payments or salary increases for the remainder of his career.
“I would be the first to admit that bank remuneration, particularly at my level . . . got out of control to some degree where there was too much reward for short-term gain. That clearly has to be changed, not only in Ireland but everywhere.”
Mr Sheehy received a total remuneration package of €2.1 million in 2007. As part of the recapitalisation, senior executive pay is to be cut by 33 per cent.
Mr Sheehy said remuneration for senior executives in AIB was down 50 per cent this year, and that no bonuses would be paid. Members of the bank’s board had taken a 25 per cent cut in fees, he added.
