DR MICHAEL Somers, the outgoing chief of the National Treasury Management Agency (NTMA), is in advanced talks with the Government to become deputy chairman of the State-backed Allied Irish Banks (AIB) following his retirement.
His likely appointment, which may be formalised next week, comes as the bank embarks on discussions with EU regulators about a radical restructuring of its business which may lead to the disposal of its US and Polish units.
The Government requested Dr Somers’s appointment as part of an effort to foster public confidence in AIB and guarantee new perspectives at the top of the troubled institution, which was recapitalised to the tune of €3.5 billion by the State earlier this year.
His likely arrival at the bank would be part of a three-way deal under which AIB chairman Dan O’Connor would assume new responsibilities as executive chairman while the head of the bank’s capital markets unit, Colm Doherty, would become managing director of the organisation at large.
AIB’s board wanted Mr Doherty to succeed outgoing chief executive Eugene Sheehy but Minister for Finance Brian Lenihan resisted his appointment on grounds he has been a member of the AIB board since 2003.
Following controversy over Bank of Ireland’s selection of an internal candidate as its new chief executive, the Government wanted AIB to appoint an outsider.
In spite of that, the bank’s board concluded that no other candidate for the top post surpassed Mr Doherty.
While Mr Doherty will take a prime role in AIB’s management, the likely involvement of Dr Somers and the decision to give Mr O’Connor new executive responsibilities stand as an effort to convey the impression that the bank is making a fresh start.
AIB submitted its restructuring plan to EU competition commissioner Neelie Kroes late last evening, prompting speculation in business circles that the group will have to retrench its operations in return for her approval for continuing State aid to its business.
Ms Kroes has taken a very tough stance with major banks that have been supported by European governments, demanding asset sales and far-reaching measures to stimulate competition in national bank markets.
Her guidelines require banks to fund a large portion of their restructuring costs from their own resources while keeping state aid to the minimum needed to ensure the viability of the business without further public subsidies.