General Secretary's Address to AIB AGM

28 Apr 2010

Good morning, ladies and gentlemen.

It gives me no joy today to have to address the Board and shareholders of AIB on a number of matters of serious concern to the Bank's employees. But in these unprecedented times for our industry, it is vital that the voice of the staff is heard since most of them are shareholders in AIB but, more than that, they are all important stakeholders in the business.

AIB staff are battle-hardened: they have come through the various disasters that have ravaged the Bank such as the major scandals around the Insurance Corporation of Ireland and the Allfirst fraud as well as a number of incidents involving overcharging. They have taken all of these setbacks in their stride - calmly reassuring customers that the Bank continues to be worthy of their business. Indeed I would argue that the key to AIB overcoming these problems has been the vital role played by staff in managing relationships with customers at all levels.

These reassurances have continued as the latest crisis has begun to unfold - even though the Bank's employees may have been increasingly concerned that each new statement from the Bank's senior management seemed to contradict what was previously asserted - creating serious difficulties for the credibility of the Bank and risking the staff's personal credibility with their customers.

Since the onset of the crisis, the staff of AIB have made many significant sacrifices for the Bank. Those with shares, of course, have, like most of you, seen the value of their holdings fall dramatically. Since, in most cases, these shares formed part of their remuneration package from AIB, they have in effect experienced a pay cut. But in addition to that, the employees have also seen:

  • their actual pay frozen;
  • their staff numbers decimated by somewhere between 1500 and 2000 over the last eighteen months through a combination of the non-renewal of temporary contracts and the non-replacement of staff leaving the Bank through retirement or resignation; and
  • most recently significant changes to their pension scheme.

And of course, as taxpayers, they have also contributed - and continue to contribute - to the Exchequer support for AIB through the deposit guarantee scheme and the recapitalisation programme.

At the same time, while taking all of this financial pain, staff have also had to endure the psychological and sometimes physical pain of the abuse and vitriol directed at them by distressed customers and angry members of the general public for the reckless decision-making in which they had no hand, act or part.

The overwhelming majority of the staff who have made these sacrifices have done so without the benefit of the golden parachutes that cushioned the blow for various senior executives and leadership figures who have departed the scene over the last year or so.

The staff have continued to make these sacrifices out of concern for the long-term future of the Bank. Unlike others who are only looking for an immediate edge to make a quick buck, the Bank's employees are generally in it for the long haul. And perhaps if we had seen some more long-term thinking in the corridors of power within AIB, the Bank may not now be in its current difficulties.

Although staff bear no responsibility for the decisions that have created these difficulties in AIB, they are being asked to pay the ultimate price with the loss of their jobs.

While we welcome the recent statement by the Managing Director, Colm Doherty, that he is committed to engage with IBOA on the future of the Bank in line with existing agreements, nevertheless we believe it is vital that the Board also hear a number of key messages from staff if the Bank's recovery is to be realised in the most effective manner:

  • The culture in the Bank has to change;
  • All solutions must be joint solutions - achieved and implemented on the basis of full consultation, negotiation and agreement - and not forced on staff;
  • The voices of the Bank's employees need to be heard at all levels of the business - all the way up to the Board.

I want to focus now on the recapitalisation plan and particularly the proposal to sell off certain assets. But I should say at the outset that even the most optimistic outcome of the proposed disposal of assets will still leave AIB needing significant Exchequer support for its recapitalisation programme to the extent that I have yet to hear an independent analyst dissent from the view that the State is likely to be the majority share-holder in the Bank by the end of this year.

The proposal to dispose of First Trust Bank and Allied Irish Bank (GB) is a matter of particular concern to the staff who work in those areas. They are naturally anxious about the future implications of any sale for their jobs and for their terms and conditions of employment (including pay and pensions). None of the more likely scenarios for the sell-off of the two banks fills them with any degree of confidence in terms of their own future. And in that sense, they feel badly let down by AIB that the reward for their loyalty and commitment to the institution over many years in a great many cases (and often seeing the Bank through some of the difficulties I refereed to earlier) - their reward is to be cast adrift at the first sign of trouble.
But beyond that sense of personal hurt and distress, our members in First Trust Bank and AIB (GB) are finding it very difficult to understand the business case for the proposed sell-off of their businesses in the context of the long-term development of the Bank.

I think their concerns may be shared by some share holders here today. While I understand up to a point the Bank's desire to minimise its dependence on Exchequer funding to meet its capital requirements since that would also reduce the eventual proportion of the shares held by the State, I believe that in this case it is bordering on an obsession - an obsession which is resulting in poor decisions being taken in respect of First Trust Bank and AIB (GB).

Given the depressed markets conditions, it is questionable as to whether a buyer will be found to pay anything like the full economic value of these businesses. Selling them off at cut-price rate in order to secure a marginal reduction in the eventual level of the State's share ownership looks to my members like a case of penny wise, pound foolish. The more prudent course would be retain the two businesses so that they can contribute to the long-term health of AIB.

Given the recent recovery in British banking stocks which seems to be predicated on a continuing improvement in the British economy, it seems to us that the wiser course is to maintain AIB's interest in the UK in order to benefit from the up-turn rather than to sell of the businesses before the up-turn gets under way. Indeed, some would argue there could hardly be a worse time to dispose of these businesses.

The key question that needs to be considered is this:
will AIB be a better bank with the potential profitable business in Northern Ireland and Great Britain as part of its future or as a much reduced player operating a seriously challenged economy in the Republic of Ireland. Remember many of AIB's major competitors - both foreign-owned and domestic - are continuing to operate on an all-Ireland basis with a significant operational presence on both sides of the border?

Mr. Chairman, First Trust Bank and Allied Irish Bank (GB) are not part of the problem for AIB: they are part of the solution. They are key elements for the reconstruction and restoration of the Bank. They can also play a role in revitalising the economies in which they operate and the communities which they serve.

Notwithstanding all of the reversals and upsets they have had to endure in recent years, the staff of AIB are willing to play their part in restoring the Bank to a position of financial soundness. They are prepared to contribute to a constructive - rather destructive - solution to the present difficulties within the framework of the principles which helped to establish AIB in a pre-eminent position in Irish banking.

To achieve this goal, staff must be treated differently than in the past. They must be listened to - rather than dictated to - at all levels of the business. The employees of AIB Group are not liabilities but valuable assets for the future recovery of the Bank. The staff have already shown that they are prepared to step up to the plate. What we are hoping for and expecting today is a similar level of commitment from the Board.

We ask the Board to reconsider its decision about the future of AIB UK - for the sake of the staff; for the sake of the communities they serve and especially for the sake of the economy of Northern Ireland with which the fortunes of the Republic are so inextricably bound; and also for the sake of the business, itself.

Thank you for your attention.