AIB's second most senior executive, Gary Kennedy (47), has announced that he will leave the bank by the end of the year. Mr Kennedy, a director of the Republic's biggest bank, will become a special adviser to the group on finance and risk, a statement said.

A financial settlement has been reached with Mr Kennedy, details of which will be included in the bank's annual report.

Mr Kennedy's boss, group chief executive Michael Buckley will retire from the bank at the end of next week. He will be succeeded by Eugene Sheehy.

Commenting on his departure yesterday, Mr Kennedy said that with a new chief executive, a new organisational structure and the reshaping of his role and responsibilities, it was the right time for him to seek fresh opportunities and challenges.

"Deciding to leave a great company is never easy and the eight years I have spent in AIB have been filled with excitement and challenge," he said. "I have thoroughly enjoyed working with colleagues in all our geographies and look forward to continuing many of these relationships in my new role as special adviser on finance and risk."

AIB chairman Dermot Gleeson said the bank was very grateful to Mr Kennedy for his very substantial contribution to the group. "He leaves at a time when the group is performing very solidly and his contribution both to this and to the planning of our future strategy is much appreciated. We wish him well in his future career."

Mr Kennedy was AIB head of finance and enterprise technology. Some of his functions have recently been taken over by the newly-appointed director of operations, Steven Meadows, who will report directly to the group chief executive and is a member of the bank's group executive committee, which runs the various divisions.

Mr Kennedy was appointed to the AIB board in 1997.