Six members of the 16-strong board of directors of Allfirst will be dropped when the annual meeting of stockholders takes place in Baltimore this morning and a new 12-member board is elected.
The outgoing directors include Mr Frank Bramble (53), chairman and former CEO of the AIB-owned bank, who has brought forward his planned June retirement. Mr Bramble is to receive $2.9 million (€3.22 million) in lieu of pension.
The meeting marks the end of a long association with the bank for Mr Jerry Casey (62), who is not listed for re-election. Mr Casey, a native of Cork who lives in Baltimore, was a director since 1985 and chairman until 1999. He was responsible for overseeing the retirement of former CEO Mr Charlie Cole in 1994 and his replacement by Mr Bramble.
Two new board members will be elected, including Mr Eugene Sheehy (48), who takes over as chairman from Mr Bramble, and Mr Michael Sullivan (62), who was US ambassador to Ireland from 1998 to 2001.
Mr Sheehy, formerly managing director of AIB in the Republic, was sent to Baltimore as chairman-elect of Allfirst and chief executive USA of AIB after the currency trading scandal that resulted in a $691.2 million loss in foreign currency deals conducted by trader Mr John Rusnak.
The annual meeting will re-elect 10 outgoing directors including AIB Group chief executive, Mr Michael Buckley, and Mr Gary Kennedy, AIB group financial director, according to filings with the Securities and Exchange Commission. AIB controls more than 99 per cent of the voting power of Allfirst's outstanding capital stock.
Directors will have little opportunity to discuss formally the state of affairs at the troubled bank in the wake of the massive trading losses and the staff changes which followed. The meeting will take less than five minutes, an Allfirst spokesman said, and it is not open to non-stockholders.
There would be no interviews or photo-opportunity for the media, he said.
Six executives were fired and two have retired since the report into the trading debacle by Mr Eugene Ludwig, who found lax management and controls at the bank. Mr Rusnak is under continuing FBI investigation for fraudulent trading and Maryland state bank regulators along with Federal Bank officials have been investigating the trading losses.
Mr Ludwig left open the possibility of legal action against other US banks over the losses when he stated in his report: "Mr Rusnak's activities may also have been facilitated by individuals at other firms." Two Bank of America trading staff have been fired for their relationship with Mr Rusnak.
Mr Ludwig criticised senior management in Dublin and Baltimore for not focusing sufficient attention on the trading operation at Allfirst which was staffed by personnel "who lacked experience and expertise".
Allfirst CEO Ms Susan Keating retained her position after the report was considered by an extraordinary joint meeting of the AIB and Allfirst boards in Dublin. The report shows that Ms Keating was not alerted by AIB executives in Dublin when opportunities arose to examine Mr Rusnak's trading more closely.
In March 2000 when AIB group treasurer Mr Pat Ryan received an inquiry from Citibank about a large gross monthly prime-account settlement due to occur, he made only a "discreet" inquiry from Allfirst risk-assessment staff.
Another opportunity arose in May 2001 when "a market source suggested to AIB that Allfirst was engaged in very heavy foreign trading". This prompted a telephone call from Mr Buckley to the head of Allfirst treasury Mr David Cronin who gave a "forceful and categorical denial of any problem". The report noted that "Allfirst's other senior executives were not made aware of this AIB inquiry".
The bank has had a mixed performance in the last year. Its loan write-offs are down down 15.6 per cent to $28.18 million but non-performing loans have increased 7.38 per cent to $121.7 million.
Allfirst said last week that it had been ranked as the ninth-largest trustee in the US for new long-term municipal bond issues in the first quarter of the year, according to Thomson Financial Investment Banking.
Allfirst has dropped to 55th place in the latest list of US commercial banks compiled by the American Banker on the basis of total assets and issued on April 15th. Last year at this time it was 49th, and in 1999 it ranked 46th.
The bank has received a reduced credit rating from Standard & Poor's since the scandal, which likely increases the cost of any wholesale borrowing by the bank from a Federal Reserve bank member. Its long-term rating was cut from "A" to "A minus" and its short-term rating from "A-1" to "A-2" by S&P, which also downgraded its rating for AIB.
Mr Maurice Crowley, chief financial officer, said that the downgrade would not impact on customers in any way. He also stated that Allfirst expects to start returning soon the emergency $600 million it received from its parent bank to restore confidence in the immediate aftermath of the announcement of trading losses.
SEC filings show that during 2001 Mr Kennedy was unable to attend at least 75 per cent of the aggregate of meetings of Allfirst directors and board committees on which he served and that during 2000, Mr Kennedy, Mr Buckley, then AIB CEO designate, and outgoing AIB CEO, Mr Tom Mulcahy, were unable to attend 75 per cent of such meetings.
