THEN THERE were three. The clear-out from the top echelon at AIB leaves in place but three State-supported institutions with a chairman or chief who predates the guarantee of the liabilities of the entire Irish banking system last September by Brian Lenihan, the Minister for Finance.
Gillian Bowler remains chairwoman of Irish Life Permanent, an institution under investigation by various regulatory bodies for its extraordinary multi-billion euro deposits with Anglo Irish Bank last year.
Richard Burrows is still chairman of Bank of Ireland, a beneficiary of €3.5 billion of public largesse and a future participant in the National Asset Management Agency (Nama).
And Fergus Murphy is still chief executive of EBS Building Society, another institution that will be a beneficiary of the Nama.
All others who occupied the posts of chief or chairman last year at Anglo, Bank of Ireland, ILP, Irish Nationwide Building Society (INBS) and the EBS are gone.
Thus the exit of AIB chief Eugene Sheehy, chairman Dermot Gleeson SC and finance director John O’Donnell marks but another phase of upheaval at the pinnacle of the business establishment.
At the fag end of a long boom that brought unparalleled success to a generation of Irish business people, many stellar reputations have taken quite a hit. Brian Goggin, Michael Fingleton, Denis Casey, Seán FitzPatrick, David Drumm and others are no longer pre-eminent figures on the business stage.
This is to say nothing of the role of the Government – led by Fianna Fáil since 1997 – whose policies sponsored the banking boom. Nor does it say anything about lax financial regulation in a market which held itself out to be a standard bearer for the world.
As turmoil tightens its grip by the day on the domestic economy – fuelled to a significant extent by consequences of an upsurge in property lending – the big surprise at this point is that it took so long for AIB’s top-ranking bankers to accept responsibility for the position their institution is now in.
Through the Nama, the State will have to pick up the debris left in the wake of the property collapse. In the midst of economic paralysis – the Economic and Social Research Institute says the current contraction in the Irish economy is the worst in any industrialised country since the Great Depression – billions of euro that might be used to reduce the public borrowing requirement are being funnelled into the banking sector.
Like Bank of Ireland, AIB is increasingly likely to end up in position of majority State ownership. While Bank of Ireland’s appointment an insider, Ritchie Boucher, proved controversial, the bank was at least seen to confront questions about it top management.
Until yesterday, AIB held the line that there was no cause for a change at the top.
The recapitalsiation pact obliges both banks to increase their lending, but Central Bank surveys indicate that institutions in the wider Irish banking sector continue to tighten their credit standards. With the restoration of banking stability a sine qua non for any economic recovery, the return of confidence seems rather a long way away.
At AIB, therefore, the position of Mr Sheehy and Mr Gleeson was becoming more unsustainable by the day. At a meeting around lunchtime yesterday in Mr Lenihan’s office, Mr Gleeson finally told him that he and his colleagues were on their way.
In AIB’s own account, the Minister conveyed his good wishes to the new chairman and deputy chairman. There wasn’t any mention of good wishes to the departees.
Widely perceived to have sought to play a stronger hand than merited by AIB’s growing weakness, the credibility of Mr Sheehy and Mr Gleeson as figures who might have been able to see the bank through the crisis was shattered in recent months by a series of reversals and rethinks.
The moment of capitulation came a fortnight ago when the bank went to Mr Lenihan to disclose that yet another €1.5 billion would be required.
Whatever the ultimate outcome of AIB’s efforts to return to a sounder footing, another generation of top management finishes its stewardship in controversy.
