Eugene Sheehy: under pressure

AIB board members and the bank's institutional shareholders are trying to force chief executive Eugene Sheehy to step down ahead of the bank's make-or-break agm next month, the Sunday Tribune has learned.

The institutions - investment managers who together control the bulk of AIB stock - called for a change in leadership at the bank in a series of meetings and contacts with the board in recent weeks.

Chief among their grievances are near total losses resulting from the collapse in AIB shares in the past year and the loss of credibility to the Irish economy caused by the banking crisis.

"Institutional shareholders have an obligation to their clients - pensions funds and savers - to consider their views as votes are exercised," Frank O'Dwyer, chief executive of the Irish Association of Investment Managers (IAIM), whose members manage more than €200bn in assets, told the Sunday Tribune. "The institutions are assessing the attitudes of their clients towards the leadership of AIB as the agm approaches." He declined to comment further.

The Sunday Tribune understands the issue of Sheehy's continuing role at the top of the bank has been raised in board meetings very recently. "Watch this space," a senior AIB figure said. The bank publicly maitained last week that Sheehy remains at the helm for the foreseeable future.

One institutional source said shareholder anger with AIB "should not be underestimated" and that the institutions had already raised the issue of leadership with the AIB board.

"It's not about shares anymore - institutions have written off value of holdings," he said. "This is about restoring credibility to the satisfaction of the markets."

The AIB agm will be preceded by an egm to approve the government's €3.5bn recapitalisation plan, which will give finance minister Brian Lenihan a 25% voting share in the bank.

The entire board will step down and put themselves forward for re-election at the agm, giving the government and the institutions an opportunity to remove Sheehy and others if they want to.

However, action could come before then if the institutions and the minister make a move, although it is understood that no IAIM statement is in the works and voting proxies have not yet been completed.

The institutional shareholders, some of which are the investment arms of Irish banks (including AIB Investment Managers), are not unanimous in their opinions on the issue.