Allied Irish Banks, p.l.c. is one of the so-called
Big Four commercial banks in
Ireland
Ireland ( ; ga, Éire ; Ulster Scots dialect, Ulster-Scots: ) is an island in the Atlantic Ocean, North Atlantic Ocean, in Northwestern Europe, north-western Europe. It is separated from Great Britain to its east by the North Channel (Grea ...
. AIB offers a full range of personal, business and corporate banking services. The bank also offers a range of general insurance products such as home, travel and car. It offers
life assurance
Life insurance (or life assurance, especially in the Commonwealth of Nations) is a contract between an insurance policy holder and an insurer or assurer, where the insurer promises to pay a designated beneficiary a sum of money upon the death ...
and
pensions through its tied agency with
Irish Life Assurance plc.
In December 2010 the Irish government took a majority stake in the bank, which eventually grew to 99.8%. AIB's shares are currently traded on the Irish Stock Exchange and the London Stock Exchange, but its shares were delisted from these exchanges between 2011 and 2017, following its effective nationalisation. The remainder of its publicly traded shares were listed on the Enterprise Securities Market of the Irish Stock Exchange until 23 June 2017.
[
]
AIB also owns
Allied Irish Bank (GB)
Allied Irish Bank (GB) is a bank operating in the United Kingdom as a subsidiary of Allied Irish Banks (legally registered in the UK as AIB Group (UK) plc).
History
The Allied Irish Bank can trace its history back to the year of 1825. It was lo ...
in Great Britain and
AIB (NI)
AIB (NI) (formerly known as First Trust Bank) is a commercial bank in Northern Ireland that is part of Allied Irish Banks's UK subsidiary AIB Group (UK) plc. It is one of the Big Four banks in Ireland. The bank was created in 1991 when '' TSB ...
in Northern Ireland. In November 2010, it sold its 22.5% stake in
M&T Bank
M&T Bank Corporation (Manufacturers and Traders Trust Company) is an American bank holding company headquartered in Buffalo, New York. It operates 1680 branches in New York, New Jersey, Connecticut, Pennsylvania, Maine, Maryland, Massachusetts ...
in the United States. At the beginning of 2008 AIB entered the Latvian, Estonian and Lithuanian markets by acquiring AmCredit mortgage finance business from the Baltic – American Enterprise Fund. This stake was sold at a loss to
Swedbank in 2012.
In 2009, Allied Irish Banks along with its competitor
Bank of Ireland accepted a €3.5
billion
Billion is a word for a large number, and it has two distinct definitions:
*1,000,000,000, i.e. one thousand million, or (ten to the ninth power), as defined on the short scale. This is its only current meaning in English.
* 1,000,000,000,000, i. ...
bailout
A bailout is the provision of financial help to a corporation or country which otherwise would be on the brink of bankruptcy.
A bailout differs from the term ''bail-in'' (coined in 2010) under which the bondholders or depositors of global sys ...
from the government of Ireland as a part of the
Bank Recapitalisation Scheme. Over several further tranches, the total bailout of AIB (including
EBS EBS may refer to:
Broadcasting
* EBS TV (Ethiopia)
* Educational Broadband Service, US TV service
* Educational Broadcasting System, South Korea
** EBS 1, a South Korean television channel
* Emergency Broadcast System, former US Warning system
...
) amounted to €20.7 billion.
In June 2017, the Irish government completed an
IPO
An initial public offering (IPO) or stock launch is a public offering in which shares of a company are sold to institutional investors and usually also to retail (individual) investors. An IPO is typically underwritten by one or more investment ...
of Allied Irish Banks.
In December 2021, when the company was valued less than 6 billion euro on the public market, the government announced it would start gradually selling its stake. The CEO of AIB is Colin Hunt since March 2019. Jim Pettigrew was appointed Chair of the Board in October 2021.
Name
Allied Irish Banks is usually referred to, both inside and outside the company, simply as AIB and often by its trade name of "Allied Irish Bank" (singular). In Northern Ireland, the bank traded as First Trust Bank until November 2019, while in Great Britain, it is called "Allied Irish Bank (GB)"—the only part of the operation where the full name, in the singular, is still in day-to-day use. Initially, the bank operated under the names of its former constituent companies, alongside a new AIB logo, a circle divided in three with an "A" at the centre. From 1970, these were replaced by "Allied Irish Banks". In 1990, AIB introduced a new
logo
A logo (abbreviation of logotype; ) is a graphic mark, emblem, or symbol used to aid and promote public identification and recognition. It may be of an abstract or figurative design or include the text of the name it represents as in a wo ...
(prompted, it was said in some quarters, by the remarkable similarity between its previous logo and that of
Mercedes-Benz
Mercedes-Benz (), commonly referred to as Mercedes and sometimes as Benz, is a German luxury and commercial vehicle automotive brand established in 1926. Mercedes-Benz AG (a Mercedes-Benz Group subsidiary established in 2019) is headquartere ...
.) Since then, the bank has preferred to be referred to as "AIB", though "Allied Irish Banks plc" remains its legal name.
The bank is often referred to colloquially as "AIB Bank", an example of a
redundant acronym. This is due to the name "AIB Bank" being adopted for the Republic of Ireland branch banking business at the time of the 1990 rebrand (with the word "Bank" being printed in the green stripe in the logo). This version of the logo is no longer used in print advertising but can still be seen on the façades of most AIB branches in the Republic. The 'Trustee Savings Banks' similarly rebranded to "TSB Bank" in 1993. The new logo features a depiction of
Noah's Ark
Noah's Ark ( he, תיבת נח; Biblical Hebrew: ''Tevat Noaḥ'')The word "ark" in modern English comes from Old English ''aerca'', meaning a chest or box. (See Cresswell 2010, p.22) The Hebrew word for the vessel, ''teva'', occurs twice in ...
, after a carving on a
Celtic cross at
Killary Church near
Lobinstown in
County Meath
County Meath (; gle, Contae na Mí or simply ) is a county in the Eastern and Midland Region of Ireland, within the province of Leinster. It is bordered by Dublin to the southeast, Louth to the northeast, Kildare to the south, Offaly to the ...
, which dates from the 9th century.
History
Allied Irish Banks Limited was formed in 1966 as a new company that acquired three Irish banks: ''Provincial Bank of Ireland'', the ''Royal Bank of Ireland'', and the ''Munster & Leinster Bank''. In 1966, AIB's aggregate assets were
IR£
The pound (Irish: ) was the currency of the Republic of Ireland until 2002. Its ISO 4217 code was IEP, and the symbol was £ (or IR£ for distinction). The Irish pound was replaced by the euro on 1 January 1999. Euro currency did not begin ...
255 million (€323.8 million)—as at 31 December 2005, the AIB Group had assets of €133 billion. In the 1980s the introduction of their Automatic Teller Machine Network called
Banklink just shortly after the
Bank of Ireland Pass. ATMs were only available in cities and major towns in the 1980s but arrived into smaller and medium towns during the 1990s.
Early history
In 1825, Provincial Bank commenced operations, pioneering joint stock branch banking in Ireland. It also established a branch in London. Royal Bank of Ireland (RBI) commenced operations in 1836, becoming known for its mercantile links. Shaw's Bank merged with Royal Bank in 1837.
In 1864, the Munster Bank was established.
In 1867, the Munster Bank purchased some of the branches of the unsuccessful Union Bank of Ireland. In 1870, The Munster Bank acquired the David La Touche & Son bank. In 1885, the Munster Bank failed due to debt and ran out of cash, causing it to close all of its branches.
Also in 1885, The Munster and Leinster Bank commenced operations.
In 1923, the Royal Bank of Ireland bought the
Irish Free State
The Irish Free State ( ga, Saorstát Éireann, , ; 6 December 192229 December 1937) was a state established in December 1922 under the Anglo-Irish Treaty of December 1921. The treaty ended the three-year Irish War of Independence between ...
business of the
Belfast Banking Company, which in turn bought the
Northern Ireland
Northern Ireland ( ga, Tuaisceart Éireann ; sco, label= Ulster-Scots, Norlin Airlann) is a part of the United Kingdom, situated in the north-east of the island of Ireland, that is variously described as a country, province or region. Nort ...
business of the Royal Bank.
1985 ICI collapse
''The Can of Worms at ICI'' was the headline in ''
Business & Finance'' magazine on 8 November 1984. The
Insurance Corporation of Ireland (ICI) was a wholly owned subsidiary of AIB when it collapsed in 1985 with losses of over
IR£
The pound (Irish: ) was the currency of the Republic of Ireland until 2002. Its ISO 4217 code was IEP, and the symbol was £ (or IR£ for distinction). The Irish pound was replaced by the euro on 1 January 1999. Euro currency did not begin ...
200 million. When it was discovered in November 1984 that ICI was operating below the statutory reserve ratio, a request for further capital was made to AIB — ICI had returned a profit of more than £80 million the previous year. This collapse occurred at a time of deep economic recession in Ireland. The level of Government debt at that time was 116% of GDP. But the Irish taxpayer bailed ICI out of its difficulties. The
Irish Government
The Government of Ireland ( ga, Rialtas na hÉireann) is the cabinet that exercises executive authority in Ireland.
The Constitution of Ireland vests executive authority in a government which is headed by the , the head of government. The gover ...
did so to ensure a continuation of the insurance business and to protect policyholders. AIB claimed that it could not resolve the problems of ICI without putting its core banking business in jeopardy. The investment of £85 million by AIB in ICI was written off and the cost to the Irish taxpayer was £400 million.
On 9 September 2010 AIB reached agreement to sell a 66% stake in
BZ-WBK to
Santander
Santander may refer to:
Places
* Santander, Spain, a port city and capital of the autonomous community of Cantabria, Spain
* Santander Department, a department of Colombia
* Santander State, former state of Colombia
* Santander de Quilichao, a m ...
for €3.1 billion, the balance of the shares to be sold on the open market. Any purchase over 66% would have forced Santander to make an offer to buy the entire company.
Recent history
Between 1999 and 2001 AIB had an interest in
Keppel TatLee Bank
Keppel TatLee Bank () was a Singapore-based financial services organisation formed through a merger of Keppel Bank and Tat Lee Bank on 26 December 1998. It was acquired by Oversea-Chinese Banking Corporation (OCBC) in August 2001 and was integrat ...
in
Singapore
Singapore (), officially the Republic of Singapore, is a sovereign island country and city-state in maritime Southeast Asia. It lies about one degree of latitude () north of the equator, off the southern tip of the Malay Peninsula, bor ...
, but withdrew after
Oversea-Chinese Banking Corporation
Oversea-Chinese Banking Corporation, Limited (), often known as OCBC Bank (), is a Singaporean multinational banking and financial services corporation headquartered in OCBC Centre, Singapore. OCBC Bank was born out of the Great Depression t ...
(OCBC) acquired Keppel TatLee.
After suffering large losses due to the activities of
rogue trader A rogue trader is person who makes financial trades in an unauthorised manner.
Rogue trader may also refer to:
* ''Rogue Trader'' (book), the autobiography of (and later a movie about) Nick Leeson, the man who caused the collapse of Barings Bank
* ...
John Rusnak
John Rusnak is a former currency trader at Allfirst bank, then part of AIB Group, in Baltimore, Maryland, United States. On January 17, 2003 he was sentenced to years in prison for hiding US$691 million in losses at the bank in 2002, after bad b ...
at Allfirst (see below) in April 2003, AIB completed a deal merging Allfirst with M&T Bank Corporation, which is headquartered in
Buffalo, New York
Buffalo is the second-largest city in the U.S. state of New York (behind only New York City) and the seat of Erie County. It is at the eastern end of Lake Erie, at the head of the Niagara River, and is across the Canadian border from Sou ...
. In November 2010, AIB sold its 22.5% stake (26.7 million shares) in M&T. The shares were sold at
US$
The United States dollar (symbol: $; code: USD; also abbreviated US$ or U.S. Dollar, to distinguish it from other dollar-denominated currencies; referred to as the dollar, U.S. dollar, American dollar, or colloquially buck) is the official ...
77.50 per share and generated $2.1 billion. The sale was part of AIB's effort to raise capital amidst the ongoing financial crisis in Ireland. AIB maintains representative offices in the United States in Chicago,
Philadelphia
Philadelphia, often called Philly, is the List of municipalities in Pennsylvania#Municipalities, largest city in the Commonwealth (U.S. state), Commonwealth of Pennsylvania, the List of United States cities by population, sixth-largest city i ...
,
Atlanta
Atlanta ( ) is the capital and most populous city of the U.S. state of Georgia. It is the seat of Fulton County, the most populous county in Georgia, but its territory falls in both Fulton and DeKalb counties. With a population of 498,715 ...
, Los Angeles, and
White Plains.
At the beginning of 2008 AIB entered the
Latvian,
Estonia
Estonia, formally the Republic of Estonia, is a country by the Baltic Sea in Northern Europe. It is bordered to the north by the Gulf of Finland across from Finland, to the west by the sea across from Sweden, to the south by Latvia, a ...
n and
Lithuanian markets by acquiring the ''AmCredit'' mortgage finance business from the
Baltic American Enterprise Fund. Now AIB operates as a branch of this financial group in Estonia and Lithuania (update needed), operations in Latvia have ceased (see below). In 2008 AIB operated through its local branches providing financial services under established AmCredit brand in all three countries. AmCredit operated as a single product mortgage business, but the company is expanding the range of banking products. All AmCredit's mortgage customers automatically became customers of the AIB branch in their country. The goal of AIB is to become a full service customer focused bank in the Baltic region. The branch in Latvia was operating between 26 November 2007 (date of registration) and 20 September 2012 (date of liquidation). Its mortgage portfolio of 800 loans was acquired by Swedbank.
In February 2008, AIB entered into an agreement to acquire a 49.99% interest in Bulgarian American Credit Bank (BACB), a specialist provider of secured finance to small and medium-sized companies in
Bulgaria
Bulgaria (; bg, България, Bǎlgariya), officially the Republic of Bulgaria,, ) is a country in Southeast Europe. It is situated on the eastern flank of the Balkans, and is bordered by Romania to the north, Serbia and North Macedo ...
. AIB later sold its stake in BACB to a Bulgarian private-equity fund for a nominal sum in May 2011.
The Irish government received shares of €3.5 billion in AIB in 2009 as part of measures to recapitalise the bank.
In April 2010, AIB announced that the Irish government would receive a stake of 16% or 17% in the bank. The Irish State had been due to receive dividends on those shares, but EU regulations state that banks that get State aid cannot make cash payments. This forced AIB to give the government shares instead.
In December 2020 AIB announced its intention to cut 1,500 jobs by 2023 noting that due to the
COVID-19 pandemic
The COVID-19 pandemic, also known as the coronavirus pandemic, is an ongoing global pandemic of coronavirus disease 2019 (COVID-19) caused by severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2). The novel virus was first identi ...
, 80% of its workforce had been working from home. Some branches will also be merged.
Re-privatization
Minister for Finance Pascal Donohoe said that the
government
A government is the system or group of people governing an organized community, generally a state.
In the case of its broad associative definition, government normally consists of legislature, executive, and judiciary. Government is ...
will start selling its 71% stake in the bank, with the sell-off slated to begin in January 2022.
Controversy
2002: John Rusnak losses
John Rusnak
John Rusnak is a former currency trader at Allfirst bank, then part of AIB Group, in Baltimore, Maryland, United States. On January 17, 2003 he was sentenced to years in prison for hiding US$691 million in losses at the bank in 2002, after bad b ...
, a currency trader at Allfirst, racked up losses of almost US$700 million during Michael Buckley's tenure as group chief executive. It was Ireland's biggest banking scandal and the fourth-biggest banking scandal in the world when it came to light on 4 February 2002.
Tax evasion
The €90 million settlement that AIB reached with the Revenue Commissioners in respect of Deposit Interest Retention Tax evasion in 2000 was the highest tax settlement in the history of Ireland. The bank's internal auditor, Tony Spollen, highlighted a potential
Deposit Interest Retention Tax (DIRT) liability of IR£100 million for the period 1986–1991, but Gerry Scanlon, the group chief executive at that time rubbished this estimate, describing it as "infantile". The
Oireachtas Sub-Committee Inquiry into DIRT hearing on 27 September 1999 concluded that it was "extraordinary" when Scanlon told the Inquiry that he was unaware of the scale of the DIRT issue.
The
Revenue Commissioners
The Revenue Commissioners ( ga, Na Coimisinéirí Ioncaim), commonly called Revenue, is the Irish Government agency responsible for customs, excise, taxation and related matters. Though Revenue can trace itself back to predecessors (with the ...
on 28 March 2006 imposed a tax settlement plus penalties on four former senior executives for their interest, while employed by AIB, arising from investments they maintained in Faldor Limited. Faldor was an investment company set up in the
British Virgin Islands
)
, anthem = "God Save the King"
, song_type = Territorial song
, song = " Oh, Beautiful Virgin Islands"
, image_map = File:British Virgin Islands on the globe (Americas centered).svg
, map_caption =
, mapsize = 290px
, image_map2 = Bri ...
that between 1989 and 1996 hold funds on behalf of these senior AIB executives as well as people connected to them. Allied Irish Banks Investment Managers then managed the funds in the company on their behalf; at the time Gerry Scanlan was CEO of the bank. Faldor subsequently benefited from inappropriate deal allocations, and artificial deals that amounted to €48,000 out of AIB Investment Managers' own funds.
Those cited include:
*Gerry Scanlon, chief executive AIB Group when this arrangement was in place, of
Glenageary
Glenageary ( ga, Gleann na gCaorach , meaning "Glen of the Sheep") is an area in the suburbs of Dún Laoghaire–Rathdown, Ireland. While there is no officially defined boundary, it is surrounded by the areas of Dalkey, Dún Laoghaire, Glasthul ...
,
County Dublin
"Action to match our speech"
, image_map = Island_of_Ireland_location_map_Dublin.svg
, map_alt = map showing County Dublin as a small area of darker green on the east coast within the lighter green background of ...
; tax and penalties amounted to €206,010.
*Diarmuid Moore, former director of corporate strategy at AIB,
Malahide
Malahide ( ; ) is an affluent coastal settlement in Fingal, County Dublin, Ireland, situated north of Dublin city. It has a village centre surrounded by suburban housing estates, with a population of over 17,000.
Malahide Castle dates from th ...
,
County Dublin
"Action to match our speech"
, image_map = Island_of_Ireland_location_map_Dublin.svg
, map_alt = map showing County Dublin as a small area of darker green on the east coast within the lighter green background of ...
; tax and penalties amounted to €51,044.
*Roy Douglas, chairman, Irish Life & Permanent Plc and formerly of AIB,
Howth
Howth ( ; ; non, Hǫfuð) is an affluent peninsular village and outer suburb of Dublin, Ireland. The district as a whole occupies the greater part of the peninsula of Howth Head, which forms the northern boundary of Dublin Bay, and includes ...
,
County Dublin
"Action to match our speech"
, image_map = Island_of_Ireland_location_map_Dublin.svg
, map_alt = map showing County Dublin as a small area of darker green on the east coast within the lighter green background of ...
; tax and penalties amounting to €53,245.43 was secured.
*Patrick Dowling, former deputy chief executive, late of
Delgany
Delgany () is a small rural village in County Wicklow in Ireland, located on the R762 road which connects to the N11 road at the Glen of the Downs.
It is about south of Dublin city centre. While it is an older more rural settlement, it is cl ...
,
County Wicklow; the estate paid tax and penalties of €13,000.
Excess FX charging issues
In 2004 it was revealed that the bank had been overcharging on foreign exchange transactions for up to ten years. The overcharging affected 3 million purchase transactions of foreign
drafts
Draft, The Draft, or Draught may refer to:
Watercraft dimensions
* Draft (hull), the distance from waterline to keel of a vessel
* Draft (sail), degree of curvature in a sail
* Air draft, distance from waterline to the highest point on a vesse ...
. Initially the projected amount of overcharging was €14 million. However the bank set aside €50 million to cover the cost of refunds.
The
Central Bank of Ireland published a report into an investigation of AIB Group concerning overcharging its own customers for FX transactions and deal allocation and other associated issues. This revealed excess charges of €34.2 million, including interest. AIB failed to comply with the law for a period of almost 8 years and that certain staff and management were fully aware of this at the time.
The
Central Bank of Ireland had been aware that AIB was overcharging consumers in FX fees but did not act for a number of years. They gave a parliamentary inquiry the "false impression" that they were unaware of it. The
whistleblower
A whistleblower (also written as whistle-blower or whistle blower) is a person, often an employee, who reveals information about activity within a private or public organization that is deemed illegal, immoral, illicit, unsafe or fraudulent. Whi ...
who gave the Central Bank the information was requested to come to a meeting with them but was only invited to withdraw the allegations of wrongdoing and at the same time found himself removed from his position at AIB without any reason given. After his case was highlighted in the media, the Central Bank officially apologised on how the authorities treated him, eight years after alerting them of overcharging.
AIB announced on 27 September 2006 that the final outlay in respect of restitution and interest arising from overcharging amounted to €65 million and that this included a donation of €20.6 million on behalf of its customers to an unspecified charity that it was unable to identify. No employee or officer of the banks was disciplined.
Apart from FX, the
Central Bank of Ireland discovered in 2004, following an anonymous tip-off, that AIB overcharged customers €8.6 million. No regulatory action was taken.
Deal allocation and associated issues
Between 1989 and 1996, funds of certain senior executives of AIB at the time and/or related parties were managed by Allied Irish Investment Managers Limited (now AIBIM) through a
British Virgin Islands
)
, anthem = "God Save the King"
, song_type = Territorial song
, song = " Oh, Beautiful Virgin Islands"
, image_map = File:British Virgin Islands on the globe (Americas centered).svg
, map_caption =
, mapsize = 290px
, image_map2 = Bri ...
investment company, Faldor Ltd.
Faldor benefited from inappropriate favorable deal allocations, by way of artificial deals, amounting to approximately IR£38,000 (€48,000) out of AIBIM's own funds. Further inappropriate deal allocation practices relating to eight transactions in the period 1991 to 1993 were identified which adversely affected the performance of two specialist unit trusts, amounting to a total of £137,000 (€174,000), to the advantage of other clients. These were unrelated to Faldor. While the Internal Audit function of AIB did identify some inappropriate dealing practices in 1991 and 1993, there is no evidence that the Faldor account was identified in these audits. No disciplinary action was taken against individuals involved in these practices at the time and compensation was not paid to the unit trusts affected. When this episode of law breaking was exposed a disciplinary process was put in place within AIB and compensation has been paid to those who were disadvantaged. Tom Mulcahy, group chief executive of AIB from 1994 to June 2001, resigned the chairmanship of the board of
Aer Lingus
Aer Lingus ( ; an anglicisation of the Irish , meaning "air fleet" compare Welsh 'llynges awyr') is the flag carrier of Ireland. Founded by the Irish Government, it was privatised between 2006 and 2015 and it is now a wholly owned subsidiary ...
on 28 May 2004 following the disclosure of this matter.
Charles Haughey and the Moriarty Tribunal
In 2006, the
Moriarty Tribunal published its report into the financial affairs of former
Taoiseach
The Taoiseach is the head of government, or prime minister, of Ireland. The office is appointed by the president of Ireland upon the nomination of Dáil Éireann (the lower house of the Oireachtas, Ireland's national legislature) and the o ...
Charles Haughey
Charles James Haughey (; 16 September 1925 – 13 June 2006) was an Irish Fianna Fáil politician who served as Taoiseach on three occasions – 1979 to 1981, March to December 1982 and 1987 to 1992. He was also Minister for the Gaeltacht from ...
. Justice Moriarty found that AIB had settled a IR£1 million (€1.27 million) overdraft with Haughey on favourable terms for the politician shortly after he became Taoiseach in 1979; the tribunal found that the leniency shown by the bank in this case amounted to a benefit from the bank to Haughey. According to the report, the bank showed an extraordinary degree of deference to Mr. Haughey despite his financial excesses.
[Haughey payments 'devalued' democracy]
— ''The Irish Times'' newspaper article, 19 December 2006.
Cashless branches
On 19 July 2022, AIB announced that 70 of its 170 branches would become cashless due to "declining demand for these services" by October 2022. Under the plans, these branches would no longer provide cash or cheque services and ATMs would also be removed. The announcement was heavily criticised by GAA clubs, local councillors and AIB customers in rural areas. On 21 July, Government TDs sought an emergency meeting with
Minister for Finance Paschal Donohoe
Paschal Donohoe (born 19 September 1974) is an Irish Fine Gael politician who has served as Minister for Public Expenditure and Reform since December 2022 and President of the Eurogroup since July 2020. He has been a Teachta Dála (TD) for the ...
regarding the move.
Taoiseach
The Taoiseach is the head of government, or prime minister, of Ireland. The office is appointed by the president of Ireland upon the nomination of Dáil Éireann (the lower house of the Oireachtas, Ireland's national legislature) and the o ...
Micheál Martin
Micheál Martin (; born 1 August 1960) is an Irish Fianna Fáil politician who is serving as Tánaiste, Minister for Foreign Affairs and Minister for Defence since December 2022. He served as Taoiseach from 2020 to 2022 and has been Leader of ...
said AIB should "reconsider and reflect on" its decision to remove cash facilities at 70 branches around the country.
The next day, on 22 July, the
Minister for Social Protection
The Minister for Social Protection ( ga, An tAire Cosanta Sóisialta) is a senior minister in the Government of Ireland and leads the Department of Social Protection.
The current Minister for Social Protection is Heather Humphreys. She is als ...
,
Rural and Community Development,
Heather Humphreys
Heather Humphreys (born 14 May 1963) is an Irish Fine Gael politician who has served as Minister for Rural and Community Development and Minister for Social Protection since June 2020. She also briefly served as Minister for Justice in November ...
called on AIB to halt the decision to go cashless at 70 branches, stating that rural communities across the country were "rightly angry" about the plan, accusing the bank of showing a "complete disregard" for rural communities. In the afternoon, AIB announced that it would not be proceeding with its plan to end cash services at 70 branches around the country following a backlash to the move from business groups, consumers, farming and rural organisations and politicians.
Current developments
The bank is currently involved in a number of "sale and leaseback" deals with its properties. In 2005 it sold an extension to its
Ballsbridge Bankcentre headquarters for €367 million. There are also plans to sell the remainder of the building for €275 million, as well as the bank's branch network for €421 million.
In February 2006 the bank announced record pre-tax profits of €1.7 billion, a 23% rise on the previous year and the largest ever for an Irish bank. The majority of the increase came from its Republic of Ireland operations, but with its Capital Markets in Northern Ireland, Great Britain, Poland and American divisions also making significant contributions. This led to criticism from some newspapers, as their profit per customer was some three times that of other European banks. Former
Labour Party leader
Pat Rabbitte
Pat Rabbitte (born 18 May 1949) is an Irish former Labour Party politician who served as Minister for Communications, Energy and Natural Resources from 2011 to 2014, Leader of the Labour Party from 2002 to 2007 and a Minister of State from 19 ...
called for more competition in the Irish banking sector. In August 2006 the bank again announced record profits for the first half of 2006, making €1.2 billion before tax, equating to €1.2 million per hour.
2008 share price collapse
The international credit crunch presented the first challenge to AIB — namely a dramatic fall-off in liquidity. As AIB depends to a significant extent on the international financial markets for liquidity due to an insufficient deposit base, this has impacted the bank severely. The Irish government stepped in with a guarantee which effectively granted a triple A rating on AIB debt, thus freeing up its
access to finance.
The second and more serious problem, unacknowledged by bank management, the financial regulator and the Irish government, is
solvency
Solvency, in finance or business, is the degree to which the current assets of an individual or entity exceed the current liabilities of that individual or entity. Solvency can also be described as the ability of a corporation to meet its long-t ...
. The question concerning solvency has arisen due to domestic problems in the
crashing Irish property market. AIB, like most Irish financial institutions, has substantial exposure to property developers in their loan portfolio. These property developers are currently suffering from gross over-supply of property, much still unsold, while demand has evaporated. The massive immigration from Eastern Europe which had propped up demand has now reversed due to rapidly rising unemployment in Ireland. Irish property developers own
speculated
The modern division of philosophy into theoretical philosophy and practical philosophyImmanuel Kant, ''Lectures on Ethics'', Cambridge University Press, 2001, p. 41 ("On Universal Practical Philosophy"). Original text: Immanuel Kant, ''Kant’s Ges ...
billions of euros of overvalued land parcels such as urban brownfield and greenfield sites, and also agricultural land at an average value of €23,600 per
acre (US$32,000 per acre or €60,000 per
hectare
The hectare (; SI symbol: ha) is a non-SI metric unit of area equal to a square with 100- metre sides (1 hm2), or 10,000 m2, and is primarily used in the measurement of land. There are 100 hectares in one square kilometre. An acre is ...
) which is several multiples above the value of equivalent land in other European countries.
AIB correctly identify a systematic risk of triggering an even more severe financial crisis in Ireland if they were to call in the loans as they fall due. The loans are subject to terms and conditions, referred to as "covenants". Although AIB is not one of the banks listed as waiving these covenants, confidence in the Irish banking system is low as a result of other Irish banks electing to waive these financial safeguards in fear of provoking the (inevitable) bankruptcy of many property developers and banks are thought to be "''lending some developers further cash to pay their interest bills, which means that they are not classified as 'bad debts' by the banks''."
Furthermore, AIB's balance sheet indicated only limited impairment (bad debt) provisions. Their 2008 1st half financial report only accounts for an impairment provision of 0.21%. This does not appear to be consistent with the real negative changes taking place in property market fundamentals. The Central Bank told the
Oireachtas Enterprise Committee that shareholders who lost their money in the banking collapse are to blame for their fate and got what was coming to them for not keeping bank chiefs in check, but did admit that the Central Bank had failed to give sufficient warning about reckless lending to property developers.
In contrast, on 7 October 2008,
Danske Bank wrote off a substantial sum largely due to property-related losses incurred by its Irish subsidiary,
National Irish Bank
Danske Bank, formerly known as the National Irish Bank, is a bank operating in the Republic of Ireland. The bank is a subsidiary of the Danske Bank Group which is headquartered in Copenhagen.
Danske Bank is organised in three business units ...
. Write downs by the domestically owned Irish banks are only now beginning to take place.
AIB's then subsidiary
Goodbody Stockbrokers
Goodbody Stockbrokers is Ireland's longest established stockbroker, stockbroking firm with roots dating back to 1877. As well as being one of the leading institutional brokers, it is one of the largest private client firms in Ireland. It is a m ...
continually issued "buy" recommendations for its then parent, notwithstanding its worsening financial position, and used Client Discretionary mandates to invest their monies in Allied Irish Banks at the start of the
post-2008 Irish banking crisis
The post-2008 Irish banking crisis was the situation whereby, due to the Great Recession, a number of Irish financial institutions faced almost imminent collapse due to insolvency. In response, the Irish government instigated a €64 billion ban ...
in November 2008, which generated adverse comment. When asked if they had ever issued a sell notice on AIB, a Goodbody spokesman said "I don't know if we even keep records going back that far".
Rescue package 2009
On 12 February 2009 the Irish government arranged a €7 billion rescue plan for AIB and
Bank of Ireland. The bank's capital value had fallen to €486 million, rather less than its 70% holding in
Bank Zachodni in Poland.
Goodbody Stockbrokers
Goodbody Stockbrokers is Ireland's longest established stockbroker, stockbroking firm with roots dating back to 1877. As well as being one of the leading institutional brokers, it is one of the largest private client firms in Ireland. It is a m ...
was sold as part of the restructuring plan for €24 million. The
Financial Times
The ''Financial Times'' (''FT'') is a British daily newspaper printed in broadsheet and published digitally that focuses on business and economic current affairs. Based in London, England, the paper is owned by a Japanese holding company, Ni ...
commented that the lowly price tag placed on Ireland's oldest stockbroker and "one-time bastion of Ireland's
Protestant
Protestantism is a branch of Christianity that follows the theological tenets of the Protestant Reformation, a movement that began seeking to reform the Catholic Church from within in the 16th century against what its followers perceived to b ...
business elite" was just another measure of the dramatic decline of the Irish economy. AIB were likely to have had to indemnify the new owners of Goodbody Stockbrokers against any legal action arising from the firm's boom-time trading.
2010: Nationalisation
On 30 September 2010, the Irish Government announced plans to use its
National Pensions Reserve to inject €3.7 billion of capital into Allied Irish Banks, becoming the majority shareholder and effectively
nationalizing the bank.
[Ireland to Take Majority Ownership of AIB in Bailout](_blank)
- Bloomberg BusinessWeek - 30 Sep 2010
AIB needed to raise additional capital due to increasing losses on bad loans incurred from the
real estate bubble
A real-estate bubble or property bubble (or housing bubble for residential markets) is a type of economic bubble that occurs periodically in local or global real-estate markets, and typically follow a land boom. A land boom is the rapid increase ...
, and Irish Finance Minister
Brian Lenihan stated that the bank was unable to attract sufficient interest from private investors.
As part of the deal, Chairman Dan O'Connor agreed to quit the bank while managing director, Colm Doherty, announced he would leave before the end of the year after 13 months in the job.
In December 2010, the
European Commission
The European Commission (EC) is the executive of the European Union (EU). It operates as a cabinet government, with 27 members of the Commission (informally known as "Commissioners") headed by a President. It includes an administrative body ...
approved the plans, and the Government passed emergency legislation to allow the deal to take place without requiring the approval of existing shareholders.
[Outrage at 'secret raid' to rescue AIB](_blank)
- Irish Herald, 24 December 2010 The High Court subsequently approved the deal on 24 Dec 2010, allowing the Irish government to take a 49.9% stake in the bank, rising to 92.8% following disposal of the Polish subsidiary to
Banco Santander
Banco Santander, S.A., doing business as Santander Group (, , Spanish: ), is a Spanish multinational financial services company based in Madrid and Santander in Spain. Additionally, Santander maintains a presence in all global financial centr ...
.
AIB became the fourth of Ireland's "Big Six" financial institutions to be nationalised, following
Anglo Irish Bank
Anglo Irish Bank was an Irish bank headquartered in Dublin from 1964 to 2011. It began to wind down after nationalisation in 2009. In July 2011 Anglo Irish merged with the Irish Nationwide Building Society, forming a new company named the Iri ...
,
Irish Nationwide Building Society
Irish Nationwide Building Society was a financial institution in Ireland from 1873 to 2011. One of the country's oldest financial institutions, it was originally called the Irish Industrial Building Society; it changed its name in 1975 when it had ...
, and
EBS Building Society. AIB was delisted from the main market of the
Irish Stock Exchange on 25 January 2011
and the
NYSE
The New York Stock Exchange (NYSE, nicknamed "The Big Board") is an American stock exchange in the Financial District of Lower Manhattan in New York City. It is by far the world's largest stock exchange by market capitalization of its liste ...
on 26 August 2011.
2011 AIB filed lawsuit
AIB filed a lawsuit against Oracle Financial Services, India in January 2011, claiming breach of contract on Flexcube implementation. The case was settled later that year.
Restructuring Credit Event
The ISDA Determinations Committee, consisting of 15 US and European banks, decided that a Restructuring Credit Event occurred with respect to Allied Irish Banks on 9 June 2011.
Sponsorships
AIB were one of the key sponsors of the 2006
Ryder Cup, which was held at
The K Club
The Kildare Hotel and Golf Club (abbreviated The K Club) is a golf and leisure complex in the Republic of Ireland, located at Straffan, County Kildare. It is built on the original grounds of the Straffan estate, incorporating the 1830s Straffan ...
in
Straffan
Straffan (variously ''Teach Srafáin'', ''Strafáin'' or ''An Cluanini'' in Irish) is a village in County Kildare, Ireland, situated on the banks of the River Liffey, 25 km upstream of the Irish capital Dublin. As of the 2016 census, the v ...
,
County Kildare. In May of that year, the bank launched a €5 million advertising campaign for the tournament. AIB also sponsor an
MSc course in Data Science at
Technological University Dublin
Technological University Dublin ( ga, Ollscoil Teicneolaíochta Bhaile Átha Cliath) or TU Dublin is Ireland's first technological university, established on 1 January 2019, and with a history stretching back to 1887 through the amalgamated Du ...
for a select few of their employees.
See also
*
AIB UK
AIB Group (UK) p.l.c. is a subsidiary of Allied Irish Banks. It is registered in Northern Ireland.AIB GROUP (UK ...
*
List of banks
Lists of banks are contained in the following articles:
By continent
* List of banks in Africa – Each country in Africa has a list of banks operating in that country
* List of banks in Asia – Asia has a list of banks operating in that co ...
*
List of banks in Ireland
*
Inter-Alpha Group of Banks The Inter-Alpha Group of Banks was created in 1971 by six banks in the European Community to provide a platform for the regular exchange of ideas and to explore areas for cooperation between its member banks. The group is a non-hierarchical associat ...
*
List of Irish companies
This is a list of notable companies based in Ireland, or subsidiaries according to their sector. It includes companies from the entire island. The state of the Republic of Ireland covers five-sixths of the island, with Northern Ireland, part of th ...
Notes and references
External links
Official site*
{{Authority control, state=expanded
Banks established in 1966
Banks of Ireland
Banks of the United Kingdom
Companies listed on Euronext Dublin
Rogue trading banks
2017 initial public offerings
Financial services companies based in Dublin (city)
Irish companies established in 1966
Irish brands
Banks under direct supervision of the European Central Bank