Profile Michael BuckleyIn detailing AIB's overcharging, Michael Buckley will be pressed for a fuller explanation than 'an administrative cock-up', writes Siobhán Creaton, Finance Correspondent
Depending on who you talk to, Michael Buckley is either AIB's luckiest or most unlucky general. Some would say that he is lucky to still be the bank's chief executive in the light of the $691 million (€581 million) trading fraud that unfolded on his watch two years ago.
Others would say he has had an unlucky reign at Ireland's most scandal-prone bank. Either way, the 59-year-old Cork man's stewardship of AIB has been cast into the spotlight once again.
Over the coming weeks he will have to explain how Ireland's biggest bank overcharged some of its foreign exchange customers to the tune of €20 million. He has already attempted to explain this embarrassing episode away as "an administrative cock-up" but should expect to be pressed for a fuller explanation by those investigating the affair. These are the financial regulator - the Irish Financial Services Regulatory Authority (IFSRA) - and AIB's own inquiry team led by Lauri McDonnell, the former comptroller and auditor general.
Buckley has proved that he is a good man in a crisis and seems unlikely to be compromised by the bank's latest misdemeanour, although some seasoned observers have been unimpressed by his handling of this relatively low-grade trauma so far.
This week, Buckley wrote to his staff to apologise for the incident and to reassure junior staff that they would not be scapegoats for the overcharging. Now they are wondering who, if anyone, will carry the can for it? It seems almost certain that it won't be Buckley.
Any chief executive who survived a $691 million trading fraud is hardly going to be blamed for having to repay €20 million to some of its customers, plus €5 million in interest. "I don't expect that he will fall on his own sword or be pushed," says one investment analyst. Another explains: "This could have happened to any bank. Buckley is impressive, very intelligent and very affable. There are other chief executives you'd like to see go before him."
This overcharging saga has, until now, been mentioned only in passing by the bank's big shareholders, for €25 million is but a drop in the ocean for a bank that makes profits of more than €1 billion a year. But many of those who were so impressed by Buckley's handling of the $691 million fraud perpetrated by rogue trader John Rusnak at AIB's US subsidiary in Baltimore, Maryland, are wondering why AIB's able chief executive has failed to impressively nip this problem in the bud.
AIB's initial reaction was to point the finger of blame at junior staff, and it is the IFSRA, rather than the bank's own management, that has been seen to be clearing up the mess.
"The amount of money is tiny. Now it is the way that it was dealt with that is the problem," is the verdict of one shareholder. "The bank shouldn't make these mistakes. It is unfortunate that this keeps turning up at AIB. It would suggest that the culture of the bank hasn't changed after Rusnak, and that is difficult to understand."
Buckley is an unlikely banker. His first choice of career was to join the priesthood and he studied for two years at the seminary in Maynooth, Co Kildare, before switching to University College Dublin to study philosophy. He has said: "It took me about two years to discover women and what they might do to you." He later married and has three children.
He began a career as a civil servant, working at the Department of Finance. At night he studied for a master's degree and taught political philosophy at UCD. In 1977 he moved to Luxembourg to work as chef de cabinet for the then president of the European Court of Auditors, Michael Murphy.
In 1981 he returned to Ireland to work as assistant secretary at the Department of Social Welfare, where colleagues noted his incredible work rate, grasp of detail and his great ability to deal with a number of difficult tasks simultaneously. Gemma Hussey, one of the ministers he served while in Social Welfare, said he was outstanding. "He was a very original thinker . . . always had a very refreshing point of view."
Five years later, Buckley delivered a speech to the annual Kenmare Economic Workshop that would set him on a very different course. One of the delegates, Dermot Desmond, the founder of NCB Stockbrokers, was so impressed by Buckley that he offered him a job.
He seemed to adapt well to the cut-throat world of stockbroking and rose to become NCB's managing director. One former colleague has said he was "the most unflappable guy he had ever seen in that job". When the firm was sold to Ulster Bank, Buckley became a millionaire.
By then he was ripe for a career change; this time he became a banker, joining AIB's capital markets division. While there, Buckley is remembered for successfully arguing Ireland's case in Europe when the German government tried to curb the tax advantages for German companies operating at Dublin's International Financial Services Centre.
With his eye on the chief executive's job, Buckley surprised many by moving to Poland to run AIB's banking business in 1999, a stint that would give him experience of running a retail bank. By the time the top slot became vacant in 2001, he was in pole position.
Many within the bank believed that Buckley would help to restore the bank's battered image. He was not tarred with the bank's past sins such as its prominent role in encouraging tax evasion by opening bogus non-resident accounts for its customers. He was also a highly regarded figure amongst the country's establishment and was appointed to the body charged with deciding on the pay rates for top civil servants, which became known as the Buckley Review Group.
Buckley is suave, very personable, and those who know him describe an almost "presidential" demeanour, while others describe him as "aloof". He is a passionate follower of the Munster rugby team, has a yacht and is an avid art collector, acquiring pieces for himself and to add to AIB's impressive art collection.
He faced his greatest challenge just nine months after his ascent to the top of AIB when a phone call from Baltimore, Maryland, revealed that the bank's former star currency trader, John Rusnak, had lost $691 million in fraudulently trading the bank's money.
Buckley has said the degree of shock was akin to hearing of a bereavement in the family. "It was a bit like hearing my brother had died in a car accident. I never thought it could happen in our bank."
Over the following days and months he bolstered the confidence of its customers and shareholders, insisting that while Nick Leeson brought Barings Bank to its knees, AIB could withstand its rogue trader's losses. He displayed a steely ruthlessness in protecting his own position during the investigation that blamed the bank's "incompetence and lack of supervision at a gross level" for allowing it to go undetected. At that time, Buckley tendered his resignation but it wasn't accepted. He said he did this in the belief that "when you look at accountability, that you can't stop at any particular level in a company. The buck, as far as I was concerned, stopped with me." Remarkably, none of the bank's senior management was censured for the fraud.
The difference this time around is that the bank is now in the dock for overcharging its customers. The problem is on Buckley's own doorstep in Ballsbridge and affects the bank's core business. While most believe that his position remains secure, the outcome of the latest investigation may yield a more senior scalp this time around.