Investors want outsider to lead AIB

By Carmel Crimmins

DUBLIN (Reuters) - Retail investors called on Allied Irish Banks <ALBK.I> on Wednesday to make an external candidate chief executive to help ensure bad lending decisions that all but wiped out the value of their shares would never be repeated.

One investor threw an egg at Allied Irish's chairman Dermot Gleeson but there was a rare round of applause for Eugene Sheehy for admitting his culpability as CEO.

"The real mistake, which obviously I take responsibility for, is that we lent too much money for development land in Ireland," Sheehy said. "It's been at the front and centre of my mind every day."

Allied Irish's reputation and bottom line have been ravaged by its exposure to plummeting commercial property markets and the bank this week more than doubled its 2009 bad debt charge to 4.3 billion euros (3.8 billion pounds) from last year, above a previous "stress case" of 4 billion euros.

Most of the company's management are departing after it saw around 20 billion euros wiped off its market capitalisation. Its share price went from a record 24.39 euros at the height of Ireland's property boom in early 2007 to just 27 cents earlier this year.

The stock was down nearly 13 percent at 89 cents in afternoon trade, matching similar falls by other Irish financials as U.S. retail data snapped hopes of a recovery in the world's largest economy.

"If you appoint, or your successor, an insider the same signal will go out ... that the cabal that has run the Irish banks for so long is going to be allowed to continue," said Shane Ross, a small shareholder and senator.

"The last thing we want here is continuity. What we want above all is change."

IMMEDIATE IMPACT

Ireland has purged its publicly quoted banks of their management after public anger at having to bail them out, but the cull, which has been extreme by international standards, has not brought in new faces.

Allied Irish is conducting an internal and external search to replace Sheehy and Finance Director John O'Donnell, who said they would leave last month after the bank said it would need an additional 1.5 billion euros in capital on top of a 3.5 billion euro state bailout.

Shareholders voted on Wednesday in favour of the state bailout, which will give the government an indirect 25 percent stake in the lender and a say on future strategy.

Analysts say the government will end up a majority shareholder in Allied when the state sets up its 'bad bank' scheme later this year and forces lenders to transfer their commercial property loans at a significant discount.

Some institutional investors believe that Allied will promote an insider to replace Sheehy, with Colm Doherty, head of the bank's profitable capital markets division, the leading contender.

Billionaire financier Dermot Desmond, who opposed Richie Boucher's appointment as CEO at Bank of Ireland, signalled he was not against an internal appointee.

"This must be a person who brings significant talent, experience and objectivity to the role, who can hit the ground running to make an immediate impact," Desmond, who owns around 0.6 percent of the company, said in a statement read by a representative.

Gary Keogh, who flung the egg at the meeting, said anything would be better than the current board.

"I cannot the stand the lies that have been going on here for the last two years. Mr Eugene Sheehey said that he would prefer to die than recapitalise the bank, well what's stopping him?," the 66 year old told local radio.

(Reporting by Carmel Crimmins; additional reporting by Padraic Halpin; editing by Elizabeth Piper, John Stonestreet)

Article Published: 13/05/2009