Anglo Irish Bank has surprised the market by appointing Mr David Drumm (37) to succeed Mr Seán FitzPatrick as the bank's chief executive

Mr Drumm, will assume his new role in January 2005. Mr FitzPatrick, who has held that position for 22 years, will take over as chairman of its board of directors.

The remuneration package paid to the outgoing chief executive last year was €2.3 million.

Mr Drumm, has worked at Anglo for the past 11 years and has spent a large amount of time at the bank's US operations in Boston.

He was one of four internal candidates interviewed for Mr FitzPatrick's job and the only who was not a director of the bank.

The others were Anglo's chief operations officer, Mr Tiarnan O'Mahoney (44); Mr Tom Browne (40), the head of its wealth management business; and Mr John Rowan (45), managing director of the bank's UK operations.

These three men are well-known figures to investors and the media, and Mr O'Mahoney had been frequently mentioned as Mr FitzPatrick's likely successor.

Announcing the new chief executive yesterday, Anglo chairman Mr Peter Murray said it was the board's unanimous choice and he was delighted that Mr Drumm would be leading the bank over the coming years.

"He was chosen from a high calibre field and he brings a depth of experience, a great feel for the culture of the bank and strong leadership skills."

Mr FitzPatrick said Mr Drumm had impressed the nomination and succession committee who handled his recruitment and had come out of the process as "a winner. There was a general sense that this was the guy. He has the backing of all the senior executives and is soaked in the ethos of the bank," he said.

Mr Drumm is relatively unknown outside of the bank but is said to be a popular internal appointment with strong support from its mid-ranking management team.

Anglo Irish Bank shares ended the day 33 cents weaker at €14.82. The drop in the share price was in line with a weaker banking sector, with market sources suggesting it was not related to the announcement.

A number of institutional investors contacted by The Irish Times said Mr Drumm's appointment came as a surprise but was positively received.

"He certainly came from behind but it's an inside appointment so it shouldn't signal a huge change at the bank," one said.

Another fund manager suggested that it was significant that Anglo's board had selected someone who came from its banking side, which emphasised the importance of customer relationships.

"I don't think there will be any change to the status quo. He is a chip off the old block," said this investor.

"It was surprising that he was not on the board, but it shows that it doesn't appear to have been a done deal," one investor said.

"People will be watching and waiting to see what he does. We are all happy enough with the news."

These investors will be watching the fallout from this appointment and said they would have some concerns about the bank if a number of senior executives were to depart.

"If there were significant fallout and a few of the top guys left, that would be a concern," one said.