Business OpinionThe chief executive and chairman of AIB did not exactly cover themselves in glory last week at the bank's annual general meeting (agm) in Galway, writes John McManus

To have been so badly wrong-footed by a question from the floor over the bank's pursuit of money owed to it as a debt of honour by Charles Haughey, was with the benefit of hindsight an avoidable embarrassment.

And we can only presume that they were wrong-footed; otherwise one would have expected chief executive Eugene Sheehy and chairman Dermot Gleeson to come up with a slightly cleverer answer than we don't know when asked about the bank's efforts to recover some £110,000 owed to it by the former taoiseach.

But how much should we read into the issue and the presumed decision by the bank not to pursue Haughey's estate? Is it really, as some would hold, an example of the continued failure of AIB to reform the internal culture that gave us Dirt, Rusnak, Faldor and a rake of overcharging incidents?

Well. All we can really deduce from the chairman's response last week is that the issue has not come up at board level. And that raises the rather interesting prospect that nobody on the board thought to ask the executive of the bank about what must be, on balance, its most high-profile bad debt.

Equally, given Sheehy's lack of insight into the matter, we can assume that it is not a matter that occupies the minds of the upper echelons of the bank's management very much either.

To be honest, there is no real surprise in this, given the somewhat more pressing issues in Sheehy's in-tray. But that does not diminish the fact that, once again, AIB has failed to see, or simply chosen to ignore, how its actions are viewed by small shareholders and customers.

Letting the Haughey estate off its debt of honour - if that is what the bank has done - may make sense from all sorts of commercial and even public-relations perspectives, but it clearly does not play well with the small shareholders, as in the small shareholders who attend annual general meetings. And they, as a rule, tend to be the more bolshie sort.

A pertinent question in all of this is what, if anything, it means about the board and Gleeson's stewardship of AIB through what many believe is going to be a very interesting period in European banking?

The catalyst for this is the battle for Dutch bank ABN Amro between Barclays and a rival trio led by Royal Bank of Scotland and including Santander and Fortis.

The thinking, albeit wishful on the part of some, is that the ripples caused by this particular stone will wash over AIB.

It is hard to judge how realistic this prospect is, but interestingly one of the loudest voices in the choir is the bank's own stockbroking arm, Goodbody.

It was quick to talk up the prospect of a "new perspective" in financial mergers and acquisitions on foot of the tripartite bid for ABN, which would see each of the three taking the parts of the bank that fits their own operation. "Is this where AIB may pop up on the radar?" asked Goodbody, which then went on to speculate that, should Barclays prevail, then one of the unsuccessful trio might see AIB as a consolation prize.

Analysts, no more than journalists, are paid to fill blank pages and Chinese walls are Chinese walls, but when a bank's stockbroker starts touting it as a takeover target, then it probably does make sense to pay attention.

The good news is that a lack of enthusiasm for pursuing a decades-old debt owed by a disgraced former politician probably has no bearing whatsoever on the ability of the board of AIB to respond to an approach from Santander or some other would-be suitor.

The most useful insight into what may happen in such a scenario comes from the mooted sale of AIB to its US associate, M&T Bank.

On one level it is quite alarming that this ill-conceived and opportunistic deal was allowed go as far as it did by the chairman, Gleeson, albeit thanks to the enthusiastic backing of the then chief executive, Michael Buckley. On the other hand, the proposal got the response it deserved in the end.

All the same, when you add that to the carry-on at the agm last week over the Haughey debt, it does raise the question as to whether the AIB board is firing on all four cylinders.