AIB kicks off search for chief executive

 
City A.M. Reporter
Allied Irish Banks (AIB) has put the sale of its British businesses on hold after failing to get any decent bids, its new chairman said yesterday, meaning the government may have to take an even larger share in the lender.

Dublin is already set to take a stake of over 90 per cent in AIB by underwriting a €5.4bn (£4.7bn) rights issue this year and plans to convert some of its existing preference shares into ordinary capital if AIB fails to raise €5bn in funds from asset sales by the end of March.

David Hodgkinson yesterday said the sale of AIB’s business bank in Britain and its First Trust retail operation in Northern Ireland was on hold. Analysts said it had hoped to raise around €1bn from selling the businesses.

“There was an attempt to sell it and it could not be sold on satisfactory terms. So, we are now going to work with the UK bank to try and strengthen it, stabilise it and we will start re-examining all the options for it,” Hodgkinson said.

AIB is retrenching from overseas markets as it plugs a €10bn plus capital hole left after a domestic property bubble burst. It has raised €3.4bn from selling businesses in Poland and the US. The government parachuted Hodgkinson, a veteran British banker, in as executive chairman last week.

Hodgkinson, a former chief operating officer at HSBC, will have to slash costs at AIB and job cuts are on the cards. “It is fair to say the bank is going to be somewhat slimmer,” he said.

Hodgkinson will also start looking for a replacement for Colm Doherty, who left his post as managing director yesterday, but he said a new chief executive would not be in place this year.