AIB chairman, CEO to step down

Three of the most senior executives at AIB, including chief executive Eugene Sheehy, are to step down, the bank said in a statement this afternoon.

Chairman Dermot Gleeson is to stand down in July while Mr Sheehy will remain with the bank until his successor is appointed. John O' Donnell will also retire as group finance director in August.

Mr Gleeson will be succeeded by Dan O’Connor while David Pritchard will assume the role of deputy chairman. Mr Pritchard will take up his new role on May 14th.

The bank said it was starting the search for a new chief executive immediately and that it would consider nternal and external candidates to replace Mr Sheehy and Mr O'Donnell.

Mr Sheehy (54) is the fifth chief executive of an Irish bank to stand down since December, following the departure of the heads of Anglo Irish Bank, Irish Life & Permanent, Bank of Ireland and Irish Nationwide Building Society.

AIB is raising €5 billion in capital, including €3.5 billion under the Government recapitalisation programme, to deal with its impaired property and development loans.

Mr Sheehy, who said in February that he intended to stay on as chief executive until his planned retirement at aged 60, had insisted that the bank wouldn't need to raise additional capital to absorb the losses.

He joined AIB in 1971 and was previously head of its US unit Allfirst Financial, which was sold to M&T Bank.

The Minister for Finance Brian Lenihan has been informed of the decision.

Fine Gael finance spokesman Richard Bruton welcomed the news. He said "complete change is required at senior executive and board level" throughout Ireland's financial sector.

"However, in no way does this represent a wiping clean of the slate in the Irish financial sector. Other key personnel still remain in place in the Central Bank and the Financial Regulator, never mind in the political system. And there is still an overwhelming need to reform the regulatory system," Mr Bruton said.

At 5pm shares in AIB were 18.5 per cent higher at 96 cent giving the bank a market value of €847 million. The stock has fallen over 92 per cent over the last year.

Additional reporting Bloomberg