There was little surprise at AIB headquarters that Eugene Sheehy had landed the top job. He was the bookies' favourite to succeed Michael Buckley and has been viewed as "a player" at the bank for more than a decade.

Sheehy joined AIB at 17, working as an official at AIB branches. He was promoted quickly and was soon managing some of the bank's biggest Dublin branches, in Capel Street and Phibsborough. Some who remember him from that time say he was well respected and had a good regard for his staff.

By 1992 he was a key figure charged with implementing a €76 million new branch banking system across AIB's network, which was being championed by the head of retail banking, Kevin Kelly. The plan, based on swingeing changes to work practices, was controversial and deeply unpopular, particularly coming at a time when relations between the bank and its staff were at an all-time low.

Sheehy is mentioned as having taken on a front-line role to engage with the Irish Bank Officials' Association at the time and eventually brokered a partnership agreement in relation to the plan's implementation.

"He had a strategic vision. He was able to put aside emotion and use what was available to get a deal done. It was very clever," one source explained.

This was certainly a feather in his cap and greatly impressed Kelly, who is regarded as having been one of Sheehy's advocates.

Seven years later, he was appointed general manager of the bank's retail operations. When Kelly retired from the bank in 2001, Buckley, who had just taken over as chief executive, selected Sheehy to replace him and brought him on to AIB's executive management committee.

Since that time, he has worked alongside many of the other's who vied for AIB's top job in recent months, including head of finance Gary Kennedy; Colm Doherty, who heads up AIB capital markets; and Gerry Byrne, who runs the bank's operations in Poland.

Sheehy was amongst the small crisis management team assembled by Buckley when the bank's US subsidiary Allfirst, in Baltimore, Maryland, was the victim of a $691 million (€515 million) trading fraud in 2002.

He was dispatched to Baltimore to deal with the fall-out from this devastating scandal and, within six weeks, he was installed as Allfirst's executive chairman and was put on its board of directors. Buckley had put him in charge.

During that time, Sheehy would have worked closely with the former US ambassador to Ireland, Mike Sullivan, who was on the Allfirst board and subsequently joined the AIB board and was on the committee assembled by its chairman, Dermot Gleeson, to select Buckley's successor.

Before the fraud, AIB had been trying to broker a deal to merge the poorly performing Allfirst with the upstate New York-based highly profitable bank M&T. Those discussions stalled while the fraud was investigated by the former US currency comptroller, Eugene Ludwig, who blamed a combination of poor controls and weak management for having allowed the fraud to go undetected for more than seven years.

Buckley came under considerable pressure to resign in the wake of the report but none of the bank's senior executives lost their jobs over it. The fraudster, John Rusnak, his direct superior and three other colleagues were dismissed.

Buckley quickly moved to re-engage with M&T in a deal to merge with Allfirst. Within months, AIB had managed to extricate itself from running a US bank and, under the terms of the deal, stood to gain in M&T's future success by taking a 22.5 per cent shareholding in it.

This was viewed as a good outcome for AIB, for Buckley and for Sheehy. He had been centrally involved in brokering this deal and was subsequently appointed as chairman and chief executive of M&T's mid-Atlantic division. Sheehy also joined M&T's executive management committee and was a director of the bank.

This experience would have set him apart from the other internal candidates and has also allowed AIB to suggest that he is both and "insider and an outsider".

In another way, Sheehy was very fortunate to have been out of the State during that period, particularly when last year AIB was embroiled in an overcharging scandal and Buckley had to send for Ludwig again.

Sheehy would have been interviewed by the Irish Financial Services Regulatory Authority's investigators, who moved into bankcentre last summer to investigate the overcharging of customers on certain foreign exchange charges for more than nine years. Some of this would have happened on Sheehy's watch.

Sources say he returned to Dublin at that time and was visible around the bank's Ballsbridge headquarters but emerged as having "clean hands".

His elevation to the chief executive's role will provide a bit of a morale boost for AIB's troops at its battle-weary retail banking business. During the overcharging saga, there were fears that relatively junior staff would end up shouldering the blame for this episode.

Once again, the corporate culture at AIB came in for widescale criticism and fuelled the belief amongst some investors that Gleeson and the executive selection committee should bring in an outsider.

In some ways, by going for a career banker in-grained in retail banking, AIB's selection of Sheehy is a radical departure. Buckley and his predecessor, Tom Mulcahy, both came to the job from its capital markets division, and some would suggest they brought a very aggressive culture to the wider group.

Sheehy's appointment has barely caused a ripple amongst investors. He had been widely tipped and is viewed as a safe pair of hands to run the Republic's biggest and most profitable bank.

Despite the many traumatic events that have overshadowed Buckley's reign, he will be leaving the bank in good shape for Sheehy.

In 2004, AIB posted a 40 per cent increase in pretax profit to a record €1.4 billion. AIB shares are currently trading at historical highs. Its cost base is also relatively lean, so there will be little need for Sheehy to wield a cleaver when he reports for work.

Those who know him point to his political nouse and say he will be acutely aware of the perception in some quarters that the job should have gone outside. He will have to assemble his own executive team and will immediately have to begin to win loyalty from the other disappointed candidates.

Within AIB, people will be watching to see who he might elevate. When he was head of retail banking, his management team included, his successor there Donal Forde, Michael O'Farrell, Mike Lewis, Michael Baume and Leo Larkin.

There seems little doubt that his focus will be on retail banking, the most profitable part of AIB's business. Some insiders say his biggest challenge will be to be seen to have changed the bank's culture. Presumably he will also be hoping that he won't have to have Ludwig's number on speed dial.