SENIOR BANKERS in AIB are bracing themselves for a reorganisation of its core retail operation after the arrival next week of the new chief of its Republic of Ireland business Robbie Henneberry.

Currently in charge of AIB’s Northern Ireland and British unit, Mr Henneberry takes over as managing director of AIB Bank (ROI) on Friday. He succeeds Donal Forde, who is leaving AIB’s board and moving to a new position as director of group strategy.

As the bank battles a worsening recession in its main market, Mr Henneberry is expected to quickly recast AIB’s internal structures.

A sharp rise in loan losses led the Irish unit to incur its first loss last year since AIB was set up in 1966, a time when every other division in the bank turned a profit.

Mr Henneberry is said to favour a flat organisational structure, one which could result in the elimination of an entire management tier.

AIB has more than 250 branches in the Republic. The managers of these branches report to 30 regional directors, who in turn report to three area directors in charge of operations in Dublin, the east-west area and the southern area.

Although Mr Henneberry’s plan has not been finalised, some sources within the bank believe the regional director structure will be stood down. In theory at least, this would increase the power of branch managers as they confront rising loan losses.

The current top-heavy management structure is seen as a problem by some within AIB, whose public forecasts in recent times were seen to be overly optimistic. AIB shares are down more than 90 per cent in 12 months. It is the only Irish bank to retain both its chief executive and chairman since the introduction of the State guarantee scheme last September.

AIB resisted Government recapitalisation until late last year, but twice within the past four months it increased the amount of new capital it said it required.

Having said it would accept a €2 billion Government recapitalisation in December, the sum was revised upwards to €3.5 billion in February. Last Monday the bank said it was seeking to raise an additional €1.5 billion through asset sales and debt buy-backs.

The reorganisation under Mr Henneberry will be designed to make it easier to restore stability to the Irish business as AIB prepares to offload development property loans and investment property loans to the National Asset Management Agency.

The bank’s development loans have a book value of €10.8 billion.