Thursday 18 January 2018

I could have stopped risky loans, admits former-AIB boss Eugene Sheehy

Eugene Sheehy
Eugene Sheehy

Former AIB Group chief executive Eugene Sheehy has confessed to the Banking Inquiry that he could have stopped his bank's risky lending to property developers.

"We took too much risk in a sector that turned out to be toxic," he told Senator Susan O'Keeffe adding: "I was CEO, I could have stopped it."

"But you didn't," she stressed, to which Mr Sheehy replied "correct".

The former CEO said this was why he was apologising to the Irish people. He had "failed" in his responsibilities.

He knew a lot of people were let down, felt very angry and rightly so. "I take personal responsibility for my action," he added.

Earlier, former AIB CEO Michael Buckley made his own apology, saying he deeply regretted the damage caused.

Mr Sheehy's view of the Bank Guarantee was that it was "critical in providing liquidity" and he did not think "any Irish bank would have survived" without it, he told Deputy Michael McGrath.

He was under the impression that night, however, that it referred to four and not six banks on the night it was agreed.

Mr Sheehy, who was present on the night of the Bank Guarantee on September 29, 2008, told how the AIB team was "dismissed" four times from the government discussions during six hours of talks.

He said they were not present while the Guarantee was being discussed.

Mr Sheehy said his bank wanted two years' guarantee ​rather than the one year being proposed and they were asked to leave while a drafting process was undertaken.


Asked by Senator Sean Barrett if the Guarantee was costed at the time, he said it was not.

Mr Sheehy then described the shock of his team when they saw the guarantee document for the first time later that morning.

"We could not understand why Anglo and INBS were included. All our discussions that night were based upon the premise that Anglo was to be taken down."

Asked by Deputy Kieran O'Donnell about a request for AIB to consider taking over Anglo Irish Bank, Mr Sheehy said it was discussed by the group executive and dismissed.

Mr Sheehy, who had a remuneration package of €2.4m in 2006, including a €1.3m bonus, told Deputy O'Donnell that "the numbers are not justifiable".

He agreed "there was no way you could tell anyone on the streets these were acceptable levels of pay".

Both Mr Sheehy and former bank CEO Michael Buckley told the inquiry they had taken substantial cuts in their pensions.

Mr Sheehy said his pension was €250,000 and he had taken a substantial cut, but Mr Buckley said he did not wish to disclose his pension figure.

Current AIB chief executive David Duffy said if the bank guarantee had not been put in place "it could have led to a more severe outcome".

He had joined in 2011 and faced a daunting task of radical restructure, which included 4,000 job losses and a €350m cost-cutting programme.

Today AIB is a profitable organisation with key performance metrics, he added.

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