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Arrogant AIB calls shots as government dithers again

  • 20-10-2009 9:59am
    #1
    Registered Users, Registered Users 2 Posts: 724 ✭✭✭





    Great article by John McManus.I simply can,t understand how the AIB board which has proved itself utterly incompetent over the last 2 years can still be so pigheaded and arrogant.The government literally holds every single card and could nationalise the bank at the drop of a hat yet AIB utterly refuses to make any concessions to this reality or to change its corporate culture at all.I won,t be surprised if AIB wins out however.

    http://www.irishtimes.com/newspaper/finance/2009/1019/1224256972550.html
    Arrogant AIB calls shots as Government dithers again



    JOHN McMANUSBUSINESS OPINION: There is something very wrong with the culture at AIB and its attitude towards the State
    THE IMPASSE over the appointment of a replacement for Eugene Sheedy at AIB is an interesting vignette that captures much of what is wrong with the attitude of the Irish banks and also the Government’s approach to its dealings with them.

    The board of AIB appears to be determined to stick by its preferred candidate, even though the Government has made it clear the appointment of an insider is not a runner. It is an unfortunate situation for the individual involved, Colm Doherty, the head of the capital markets division. But given the nature of the job and the events that have led to its becoming vacant, he can hardly be surprised.

    AIB has been rescued by the taxpayer and that makes politics and public opinion a factor in the appointment of a chief executive. And in this case their wishes have the added bonus of making sense. Something went badly wrong at AIB and the other banks and bringing someone in from the outside is the best way to drive reform.

    Unfortunately, the decision of AIB to face down the Government indicates that the amazing arrogance that has characterised AIB’s behaviour over the last 12 months – and no doubt contributed to the mess it has found itself in – remains undiminished.

    It is hard to credit such hubris. The board of AIB lost its moral authority on that night last September when it went to the Government looking for State support and got a blanket guarantee from the taxpayer.

    However, the penny did not appear to drop with AIB and the bank has pretty much fought the Government at every turn since then. Ungracious does not even come close to describing its attitude to the Government which pretty much had to force the bank to take fresh capital.
    The grudging acceptance by former chairman Dermot Gleeson and outgoing chief executive Eugene Sheehy of the need for them to accept personal responsibility pretty much put the tin hat on it.

    Even the creation of the bank-friendly National Asset Management Agency to clean up the mess it has made and which could cost the tax payer billions, has not softened the bank’s cough if its attitude to the appointment of a new chief executive is any yard stick.

    In one way it is quite understandable. The bank’s unjustified arrogance has paid some dividend. It has allowed it to capitalise on moments of indecision and a lack of confidence by the Government at various stages.

    Along with the other banks AIB was able to persuade the Government to bring in the guarantee, which has now become a millstone around the taxpayers’ neck. More importantly, it has succeeded in convincing the Government that the avoidance of bank nationalisation should be a policy objective rather than something dictated simply by whatever is expedient in the national interest.

    All in all the banks have done extraordinarily well given the paucity of their hand – bankrupt and still in business only thanks to the support of the taxpayer. Their “success” in shaping the Government’s response to the banking crisis can only have reinforced their sense of superiority over what they presumably see as a fairly inept Government.

    The Government’s failure to assert itself over the issue of the AIB chief executive also reinforces this dynamic. Its reticence goes beyond the need to respect legal niceties of appointing a chief executive of a bank.

    It echoes the indecision that has characterised some of the worst decisions made over the past 12 months. The procrastination over Anglo Irish Bank and the inexplicable delay in forcing the departure of Michael Fingleton from Irish Nationwide Building Society are two glaring examples.
    The Government’s lack of authority is as hard to understand as AIB’s arrogance.

    The Government may have stumbled through much of the last 12 months, but it can with some justification say it has a better grip on things now. Admiration for the Minister for Finance is growing in business circles.

    The idea that the Government will now allow itself to be bullied into accepting an insider at AIB by a discredited board is bizarre.
    The mere fact that a standoff has arisen in the way it has only confirms that there is something very wrong with the culture at AIB and its attitude towards the State.
    The view from bank centre would very much appear to be that the State is there to serve AIB’s interests rather than the other way around.
    It is something that has to change and appointing an outsider is the way to make that happen.


Comments

  • Registered Users, Registered Users 2 Posts: 51,342 ✭✭✭✭That_Guy


    Good article.... Could do with paragraphs though.


  • Registered Users, Registered Users 2 Posts: 1,311 ✭✭✭Procasinator


    Use the quote tag and always link to the original article:

    http://www.irishtimes.com/newspaper/finance/2009/1019/1224256972550.html


  • Registered Users, Registered Users 2 Posts: 43,028 ✭✭✭✭SEPT 23 1989


    They all belong to the golden circle of parasites we having running this country


  • Registered Users, Registered Users 2 Posts: 81,220 ✭✭✭✭biko


    They think they are like their counterparts on Wall Street and London - "Captains of the Universe", untouchable and totally corrupt


  • Closed Accounts Posts: 1,181 ✭✭✭LouOB


    Just another shining example of how being a good decent hard worker will get you no where in life. As the culture will always be ingrained to appoint a clone


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  • Registered Users, Registered Users 2 Posts: 1,311 ✭✭✭Procasinator


    I agree with the authors sentiments. An outsider should be appointed CEO.

    Considering the bailout, not to grant this wish to the Government - and, even more so, the people - is very arrogant.

    However, this article ignores the fact that no suitable candidate has been found. Someone has to do the job, and everyone who has been offered the job has so far declined to take it (even by those internal to AIB).


  • Closed Accounts Posts: 16,391 ✭✭✭✭mikom


    What the frig is goin' on in this thread with all the article posting........ are ye trying to give me an aneurism.


  • Closed Accounts Posts: 17,918 ✭✭✭✭orourkeda


    mikom wrote: »
    What the frig is goin' on in this thread with all the article posting........ are ye trying to give me an aneurism.

    reading does that to some people


  • Registered Users, Registered Users 2 Posts: 24,231 ✭✭✭✭ejmaztec


    I've been wondering for some time whether the banks exaggerated the trouble that they were in before the bailout, just so that they could get their hands on a sh1tload of cheap money from us suckers.:confused:


  • Registered Users, Registered Users 2 Posts: 3,323 ✭✭✭Hitchhiker's Guide to...


    AIB wants to appoint the head of their capital markets division as CEO. He has already made a few hundred million in profit for them this year and has consistently made profits for the bank even when all other parts of the bank are bleeding money. Hardly seems like a crazy decision given his known competency.


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  • Registered Users, Registered Users 2 Posts: 724 ✭✭✭jonsnow


    I refuse to accept that on the whole planet their is not one suitable external candidate who is prepared to run AIB for €500,000.AIB is not exactly a huge international worldbeating bank and its about to get a lot smaller as it returns to its core functions.It seems to me that the AIB board haven,t been looking that hard abroad as they have their own man and are determined to appoint him.


  • Registered Users, Registered Users 2 Posts: 1,311 ✭✭✭Procasinator


    jonsnow wrote: »
    I refuse to accept that on the whole planet their is not one suitable external candidate who is prepared to run AIB for €500,000.AIB is not exactly a huge international worldbeating bank and its about to get a lot smaller as it returns to its core functions.It seems to me that the AIB board haven,t been looking that hard abroad as they have their own man and are determined to appoint him.

    Maybe so, but reports of multiple people refusing the job is not a great sign.

    This might also anger you: http://www.herald.ie/national-news/aib-defies-lenihan-on-pay-rise-1917806.html

    Though it appears to be those below the manager level (which is a little compensation :P)


  • Registered Users, Registered Users 2 Posts: 3,375 ✭✭✭kmick


    Private industry does not in the main consider they owe anything to anybody unless its in a contract somewhere. So unless there is a piece of paper somewhere that stipulates what the government explicitly got for their bank guarantee (which as far as I can see was nothing) then they can whistle. A government appointed head of AIB would be the death knell for that company. Imagine appointing someone like Brendan Drumm as head of a private company. Id be withdrawing my money the next day. I would not be surprised if the top people at AIB have a similar opinion about government appointed mopes. I mean FAS, HSE, CIE, ESB are not exactly shining examples of modern management led successful companies.


  • Registered Users, Registered Users 2 Posts: 724 ✭✭✭jonsnow


    Maybe so, but reports of multiple people refusing the job is not a great sign.

    This might also anger you: http://www.herald.ie/national-news/aib-defies-lenihan-on-pay-rise-1917806.html

    Though it appears to be those below the manager level (which is a little compensation :P)

    This is the sort of stuff that was bound to happen when the Irish government handed over billions of euros to AIB (and the others) with absolutely no "quid pro quo" and no legal set of obligations.Thinking that they could have any control over the irish banks and their ingrained culture because they owe the irish taxpayer for their very existence was naivety in the extreme.


  • Registered Users, Registered Users 2 Posts: 724 ✭✭✭jonsnow


    kmick wrote: »
    . A government appointed head of AIB would be the death knell for that company.

    The company was already dead.It had bankrupted itself while being run by all those brillant non-government appointed types.We,ve resurrected it as a zombie bank.

    kmick wrote: »
    . Imagine appointing someone like Brendan Drumm as head of a private company.

    Actually Drumms been far better at his job than sheehy was at his.
    Ireland has moved up two places in the Euro Health Consumer Index (EHCI) since last year and now ranks 13th out of 33 European countries.
    When the index started three years ago, Ireland was ranked 28th out of 29 European countries surveyed.
    kmick wrote: »
    I would not be surprised if the top people at AIB have a similar opinion about government appointed mopes. I mean FAS, HSE, CIE, ESB are not exactly shining examples of modern management led successful companies.

    and who are the top people at AIB to cast judgement on anyone they are as incompetent and stupid as any of the people at the semistates.AIB is not exactly a shining example of a modern management led successful company.

    Anyway the government isn,t trying to appoint some civil servant to run AIB they just want a banker from outside Irish banking culture not a complete insider.


  • Registered Users, Registered Users 2 Posts: 23,246 ✭✭✭✭Dyr





    Considering the bailout, not to grant this wish to the Government - and, even more so, the people - is very arrogant.

    Was our govt. spineless enough to bail them out without looking for some quid pro quo? Seems so. Arrogance is born from confidence, they seem to think they can do this and they seem to be right.


  • Closed Accounts Posts: 28 MKMaguire


    A former USA ambassador to Ireland, McClusky I think, said on his departure ... "... the Irish never become outraged at anything ... ". He expanded this saying "... we just talk and do nothing ..."! History repeats itself ... keep reading.


  • Registered Users, Registered Users 2 Posts: 37,316 ✭✭✭✭the_syco


    AIB wants to appoint the head of their capital markets division as CEO. He has already made a few hundred million in profit for them this year and has consistently made profits for the bank even when all other parts of the bank are bleeding money. Hardly seems like a crazy decision given his known competency.
    Agreed. Also, an "outsider" would have had to have experience in the banking sector. We don't want a college grad taking control of AIB, nor do does AIB want someone who they don't know. Someone who has proved themselves is what we want.
    AIB has been rescued by the taxpayer and that makes politics and public opinion a factor in the appointment of a chief executive. And in this case their wishes have the added bonus of making sense. Something went badly wrong at AIB and the other banks and bringing someone in from the outside is the best way to drive reform.
    So because the taxpayer bails the company the government decides who to run it? Looking at how great their decisions have been, I'd rather AIB decides on who gets the job, as opposed to FF. Also, I wonder who the government wants to run AIB. Knowing the governments history, my bets is that it's a family member of one of the serving politicans.


  • Registered Users, Registered Users 2 Posts: 724 ✭✭✭jonsnow


    the_syco wrote: »
    Agreed. Also, an "outsider" would have had to have experience in the banking sector

    Well yeah thats the plan.

    the_syco wrote: »
    We don't want a college grad taking control of AIB, nor do does AIB want someone who they don't know.

    Who says they,re going to appoint someone straight out of college!!It,ll be someone with 30 years experience behind them.And who cares what AIB want -its their chummy golden circle consensus which was partly to blame for the whole debacle.Some outside perspective is whats needed.

    the_syco wrote: »
    Someone who has proved themselves is what we want.

    There are plenty of other bankers around the world who have proved themselves.Doherty has been on the AIB board since 2003 and so signed off on the incompetent strategy which destroyed the bank.Hes damaged goods.

    the_syco wrote: »
    So because the taxpayer bails the company the government decides who to run it?

    Well it should have some say especially when its recommendation makes business sense.


  • Registered Users, Registered Users 2 Posts: 1,311 ✭✭✭Procasinator


    Bambi wrote: »
    Was our govt. spineless enough to bail them out without looking for some quid pro quo? Seems so. Arrogance is born from confidence, they seem to think they can do this and they seem to be right.

    No doubt. Doesn't mean we can't bitch about it. :P

    kmick wrote: »
    A government appointed head of AIB would be the death knell for that company.

    Doesn't have to be a government appointed head, just has to be someone external that everyone can be happy with (term 'everyone' used loosely, as everyone being happy is not feasible).


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  • Registered Users, Registered Users 2 Posts: 5,103 ✭✭✭mathie


    Banks and bankers are c**ts shocker.


  • Registered Users, Registered Users 2 Posts: 3,375 ✭✭✭kmick


    jonsnow wrote: »
    The company was already dead.It had bankrupted itself while being run by all those brillant non-government appointed types.We,ve resurrected it as a zombie bank.
    Im not disagreeing but the point made was that unless there is a contract somewhere thats says AIB owes the the government something then they dont.
    jonsnow wrote: »
    Actually Drumms been far better at his job than sheehy was at his.
    Ireland has moved up two places in the Euro Health Consumer Index (EHCI) since last year and now ranks 13th out of 33 European countries.
    When the index started three years ago, Ireland was ranked 28th out of 29 European countries surveyed.
    Stats are wonderful things. I have a wife and many friends who work in the health service and Drumm has been an abject failure at cutting down on waste, managing staff contracts and balancing a budget.
    jonsnow wrote: »
    and who are the top people at AIB to cast judgement on anyone they are as incompetent and stupid as any of the people at the semistates.AIB is not exactly a shining example of a modern management led successful company.
    Agreed
    jonsnow wrote: »
    Anyway the government isn,t trying to appoint some civil servant to run AIB they just want a banker from outside Irish banking culture not a complete insider.
    Again I dont think they have a say unless under law they are a shareholder. It may be impossible for AIB to move while NAMA is still a twinkle in Cowens eye but you can be sure once they have their money they will be pulling out the contract whenever the government try to stick their oar in.


  • Registered Users, Registered Users 2 Posts: 43,311 ✭✭✭✭K-9


    Maybe so, but reports of multiple people refusing the job is not a great sign.

    This might also anger you: http://www.herald.ie/national-news/aib-defies-lenihan-on-pay-rise-1917806.html

    Though it appears to be those below the manager level (which is a little compensation :P)

    The Labour Court recommended the pay rise. AIB was actually looking for a 5% cut.

    Mad Men's Don Draper : What you call love was invented by guys like me, to sell nylons.



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