AIB’S NEW managing director Colm Doherty has written to its staff admitting the bank is to blame for its current problems and hinting there may be job losses down the road.
Mr Doherty wrote to staff yesterday outlining his strategy for “the next 1,000 days”. His letter says “AIB is in a difficult place right now” and describes the last 18 months as particularly challenging. “While some of our problems are due to the global financial turmoil, the reality is that most of them are self-inflicted,” Mr Doherty says.
“The support of the Irish Government and of the taxpayer has been very important in helping us deal with the unprecedented events that have challenged the very survival of our business,” he adds.
Mr Doherty also concedes that AIB’s credibility and reputation have been badly damaged, and that frontline staff have had to bear the brunt of customers’ anger as a result.
“It is a source of deep regret for me that this is happening as I know the vast majority of staff are entirely blameless for the current problems,” he said.
Mr Doherty was at the centre of the latest controversy to hit the bank when his pay became the subject of a row between Government and the AIB board, which appointed the new managing director.
AIB originally intended paying him €633,000 a year, the salary he received in its capital markets division, instead of limiting it at €500,000 in line with Government guidelines. The bank subsequently agreed to cut Mr Doherty’s pay to €500,000.
The Government had also sought the appointment of a bank outsider to the post of chief executive. Mr Doherty, formerly head of AIB Capital Markets, was given the post of managing director as a compromise.
As part of a “1,000-day plan” to rebuild the bank, Mr Doherty says that pay will remain frozen next year, while it will consider all other options to further cut its costs.
“I am particularly conscious that people are concerned about their careers and job security,” he says. “However, our current costs are too high for the level of revenue we expect to generate.
“We have already reduced our workforce by 1,500 this year through natural attrition, and tough decisions are needed to further reduce our costs.”
Mr Doherty points out that the bank’s culture is under scrutiny and says that he expects management to be accountable for their actions and those of their staff.
He stresses that AIB’s ethics are easy to understand and available to everyone on the staff. “We all know what is right and what is wrong and the spirit is as important as the letter,” he says.
“I want to make it clear that in relation to breaches of these policies, I will have zero tolerance,” he says.
His plan sets out six areas where Mr Doherty wants to make real progress by mid-March, the first 100 days of his plan. They include appointing a new management team and delivering Nama.
The State rescue agency for bad banks intends buying over €24.2 billion worth of secured property loans from AIB, but it will pay the bank about €8 million less than this figure for those loans.
Mr Doherty also intends reorganising the bank’s credit and risk functions, and says it is crucial that AIB’s credit and risk infrastructure, policies and practices be integrated so that risk can be managed in a timely and effective way.
