Shareholders at AIB have voted by an overwhelming majority in favour of the recapitalisation of the bank by the state. The bank has now received €3.5 billion, and in return it has allotted the agreed number of preference shares to the Government. Finance Minister Brian Lenihan has welcomed the vote.
All of the eight resolutions which were required for the recapitalisation scheme to proceed were passed by more than 99% at an extraordinary general meeting. The bank's AGM then took place this afternoon.
Speaking at the EGM, AIB's chairman Dermot Gleeson said he regretted some of the lending decisions taken by the bank, and in particular the impact they have had on shareholders, customers, staff and others.
Shareholders at the EGM expressed their anger and disappointment at the bank's recent performance. One angry shareholder threw an egg at chairman Dermot Gleeson shortly after the meeting started. The shareholder identified himself as Gary Keogh from Blackrock in County Dublin, who is retired. He told the media that his pension income had been wiped out by the collapse in bank shares.
Another female shareholder said the bank had squandered their investment through dereliction of duty and greed. She said that as a shareholder she felt robbed and cheated.
AIB 'got it wrong on economy'
At the start of the meeting, Mr Gleeson said he was acutely aware of the anger and disappointment among shareholders, and of the individual hardships brought about by the fall in the bank's share price and temporary halting of dividend payments.
Mr Gleeson told shareholders his decision to retire in July was the correct thing to do. He said shareholders and other stakeholders are entitled to a clear signal of accountability.
Mr Gleeson said AIB could not have emerged unscathed from the global turmoil, but said the bank could have done better. He admitted that the bank was wrong in its view that that the momentum in the global and Irish economies would slow gently, rather than abruptly.
Mr Gleeson also paid tribute to the Government for introducing the bank guarantee scheme, calling it 'an essential move'. He said the proposed recapitalisation scheme represented a positive and pragmatic approach to raising capital, while aiming to protect as much as possible the rights and interests of AIB shareholders. Mr Gleeson added that AIB supported the establishment of NAMA.
Addressing the possibility of the nationalisation of AIB, Mr Gleeson said he firmly believed that it would be a bad thing for shareholders and for Ireland, and should be avoided at all costs.
Ian Bateson from Dermot Desmond's investment group IIU also read a statement on behalf of Mr Desmond. It said Mr Desmond backed both Dermot Gleeson and Eugene Sheehy in their decision to retire. He said the focus must be on looking forward to the sustainable recovery in the bank's share price. He added that AIB had a pivotal role for the Irish economy and a 'team of proven ability' must be appointed.
Speaking at the meeting, Senator Shane Ross said it was important that AIB did not appoint an 'insider' to replace Eugene Sheehy as chief executive, saying Bank of Ireland had made an 'appalling mistake' by appointing Richie Boucher to replace Brian Goggin. He said the last thing we needed was continuity, and what was needed above all was change.
Later, chief executive Eugene Sheehy told the AGM AIB had increased its market share of mortgages from 17% to 33% in the past three to four months. It gave out 370 mortgages to first-time buyers in April, the highest rate since May 2005. He also said the bank made no repossessions in 2008.
Lenihan expects to be consulted
In a statement, Minister for Finance Brian Lenihan said the recapitalisation was a 'key step' in the Government's approach to the financial crisis. He pointed out that AIB would pay interest of 8% on the preference shares, amounting to about €280m a year.
The preference shares also have warrants attached giving the State an option to buy shares in AIB in five years time at a pre-determined price.
Under the terms of the recapitalisation, the Minister has the right to name four non-executive directors. He has confirmed the appointment of Dick Spring and Declan Collier, and said he would be naming two further directors shortly.
Mr Lenihan also said he expected to be consulted on replacements for the bank's chairman, chief executive and finance director over the next few months.