MICHAEL BUCKLEY set AIB on a course into property lending as chief executive in 2003. His successor, Eugene Sheehy, proceeded at speed into this area from 2005 to 2008.
The biggest losses at AIB were in the Republic of Ireland (ROI) division run by Donal Forde from 2002 to 2009. Forde, who was made an AIB director in 2007, left when Colm Doherty, former head of capital markets, took charge of AIB in 2009.
About 2005, Doherty, a board member at AIB, had raised concerns that big loans were being approved in the retail bank and felt that his own capital markets division, which processed big business loans, was better equipped to approve them.
Doherty raised the matter in the AIB boardroom, but his objections were seen as an internal power struggle at the bank between AIB IFSC (where capital markets was based) and AIB Bankcentre (where the retail bank was based).
He was accused in the boardroom of attempting a “land grab” for his unit and, in response, dropped the matter, despite reservations about the growth in property lending.
AIB’s board was chaired by Dermot Gleeson until 2009. The other directors at the peak of the boom in 2006 and 2007 were finance director John O’Donnell and non-executives Kieran Crowley, Sean O’Driscoll, Mike Sullivan, Jenny Winter, Bernard Somers, Jim O’Leary and Dan O’Connor. All these directors have since left the bank.
Within the ROI division, one of the main players in property lending was Tommy Hopkins, who was head of the business banking sectoral teams. He reported to head of business and private banking Leo Larkin who in turn reported to Forde.
Below Hopkins was Donal Halpin, the head of property and construction. The growth in property lending and the profits made from this business during the boom years made Hopkins one of the highest paid executives at the bank.
Hopkins had a team of between 70 and 90 people working for him. He was the point of contact for the bank’s relations with many of the biggest developers and builders that it bankrolled in the boom.
Remarkably, Hopkins was also a property player in his own right. His company Marchbury built 222 houses in Balbriggan, north Co Dublin, in 2007, and he also owned land in other parts of Co Dublin.
Concerns were raised about Hopkins’s own property business within AIB, and the issue was examined by management on a number of occasions during the property boom and it concluded there was no conflict of interest.
In fact, Hopkins’s own experience in property was seen as a benefit in that he knew the development game well and could relate to, and work well with, AIB’s biggest borrowers.
While Hopkins did not approve loans by himself, he was one of between 10 and 12 on the ROI credit committee. The bigger the loans got, the higher up the bank’s chain they went for approval, from the ROI credit committee to the group credit committee to the main AIB board.
Hopkins has left the bank. Halpin still works at AIB. He was described in a High Court action taken by developer David Daly against the National Asset Management Agency and AIB last year over debts of €457 million as “one of the key client relationship managers” for Daly.
Noel Murphy was chief credit officer in the ROI division.
Above Murphy was David Meagher who was group chief credit officer until his retirement in 2007. He was replaced by Kieran Bennett.
Murphy reported to Forde rather than the group chief credit officer. He is now a head of case management in AIB’s Nama unit, while Bennett is head of asset management in the non-core unit.
The man in charge of risk at AIB during the boom years was Shom Battacharya, who was group chief risk officer from 2002 to 2007. He now works at a bank in New York.
AIB has said most of the 57 most senior managers below the top executives have either left the bank or been reassigned to new roles.
