Business Opinion: The dust has now settled on last week's revelation that the board of AIB considered a proposal last autumn from chief executive Michael Buckley that it sell itself to M&T, its US associate.

Paradoxically, the news that the bank seriously contemplated a transaction that no analyst could see any sense in added a couple of hundred million euro to the AIB share price and pretty much guaranteed its entry into the Dow Jones Euro Stoxx 50 later this month.

Some of the credit for this must go to Buckley and the statement he issued to staff after the story broke. For those of you who do not speak fluent AIB chief executive, we offer the following translation of the pertinent parts of the memo.

"Dear Colleague

AIB Strategy 2005-2010

A front page report in this morning's Irish Times, taken up on radio, said that the board of AIB considered last autumn a possible merger between our bank and M&T, in which we have a 23 per cent stake.

There was such a discussion at the board.

I presented the board with a paper which indicated two plausible long-term strategic scenarios for AIB. One would be quickly to create a much bigger and financially stronger transatlantic bank by merging AIB and M&T. The other would be to continue to pursue a stand-alone strategy focused on our existing strong position in Ireland, the UK and Poland."

Buckley proposed the sale of AIB to M&T, a smaller US regional bank at a reported price of €13 a share, which represented no premium over AIB's then share price and would, in effect, be a reverse take-over. To characterise this as presenting two scenarios is like describing an engagement proposal as presenting someone with the scenario of getting married and the scenario of remaining single.

"After a debate, there was a very strong consensus by the full board to choose the second approach."

The board rejected Buckley's proposal.

"This will see the bank grow as a strong, independent European financial institution, which will continue to have a presence in the US, both through our direct corporate banking activities and through our shareholding in M&T. The group executive then spent a considerable amount of time together in the final quarter of 2004 developing a more detailed long-term strategy on that basis, which I presented to the board in January and which the board adopted."

AIB's executive and board then got on with doing what they should have been doing before Buckley brought forward his proposal.

"Developing a long-term strategy involves looking at a range of different options in order to choose the one most appropriate to the character and nature of an organisation, its employees, customers and shareholders. Over time, we have looked at a range of different future growth scenarios. The role of the chief executive in this context is to be challenging of the status quo, to develop different scenarios and to bring about an open debate on the strengths and weaknesses of each."

Buckley justifies his decision to put a proposal to the board that appeared to make no sense to anybody except him, and which they duly rejected, on the basis that his job is to be provocative.

"This is exactly what occurred. Initially the scenarios were debated at the group executive. They favoured the standalone scenario but it was decided that both scenarios would be presented to the board."

Buckley put the proposal to the board even though his senior executives did not back it because they did not think it made sense.

"The chairman facilitated the debate at the board but he did not sponsor the merger scenario."

Although AIB chairman Dermot Gleeson allowed the chief executive to bring forward to the board a proposal to sell the bank that did not have the support of the other executives and was rejected by the board, this should not be interpreted as him lending support to what looks in hindsight like a terrible idea. Thus he should not be seen as a lame duck in the way that Buckley - who must retire by next February - now appears.

"When I brought the scenarios forward for discussion by the board we were still dealing with the regulatory matters arising from the foreign exchange charges and related issues. However, neither of the long-term scenarios were influenced by those regulatory matters."

Buckley was not trying to take advantage of the difficult situation the bank was in to push through a project that only he seemed to be in favour of.

"In bringing these scenarios to the board, I wanted to make sure that all options were explored before agreement was reached on what would constitute a robust long-term plan for the continued growth and development of AIB - a plan around which the management team and the board were united. That plan is now based on board and management commitment to an independent future for AIB."

Buckley still believes that it was a good idea to bring a proposal to the board that his executives did not support, the board did not back and the chairman did not sponsor.