AIB has announced the appointment of Colm Doherty as its new group managing director, while Dan O'Connor is to take on the role of executive chairman on a temporary basis.
The bank said that Mr Doherty, currently head of its Capital Markets division, will take on the MD role on a salary of €500,000 and will take up his position immediately. He will be responsible for the day to day running of the bank.
In a statement, Minister for Finance Brian Lenihan wished Mr Doherty well in his new role.
The minister welcomed the decision by the incoming managing director to accept a substantial reduction in his current salary.
Dick Spring, AIB Public Interest Director, confirmed in a statement that an exhaustive search was carried out for a person to lead the organisation.
He said: 'An exhaustive, comprehensive and independently assessed search for the CEO was carried out and concluded.
'I'm confident that the process sought, identified and interviewed all suitable candidates. Mr Doherty emerged as the best candidate for the process.'
AIB board member and head of the bank's remuneration committee, Sean O'Driscoll, said the bank undertook a comprehensive search across the world for a suitable candidate, before deciding to propose Mr Doherty for the post.
He said that the salary cap of €500,000 and the media scrutiny the role was attracting were both significant hindrances to filling the position.
Mr O'Driscoll said the bank would adhere to its undertaking that there would be no bonuses to senior executives for a number of years, without the prior approval of Government.
Meanwhile, AIB says that Mr O'Connor will oversee work on the completion of the key tasks of capital raising, the implementation of NAMA and the EU restructuring plan.
In a statement, AIB said that is current group chief executive, Eugene Sheehy, is to retire at the end of the month.
The bank also said that Dr Michael Somers, who formally announced his retirement as CEO of the National Treasury Management Agency today, will take on the role of deputy chairman on the AIB board. He will also chair the AIB board's risk committee.
The current AIB deputy chairman, David Pritchard, is to step down from the post but will keep his role as senior independent director at the bank.
A statement from the bank said that the executive functions of group finance director and group chief risk officer will be filled by external appointments.
After NAMA and the EU restructuring plan is finalised, which is expected to happen by the middle of next year, AIB said that it will conduct an assessment of its management structure.
AIB ups bad debt charge by €1 billion for 2009
AIB said it is expecting its bad debt charge for 2009 to be around €5.3 billion, an increase of €1 billion from previous forecasts.
In an interim management statement, the bank said the increase is mainly due on the €24 billion loan portfolio that may transfer to NAMA.
The bank said of that €24 billion portfolio, about €6.7 billion was impaired in the first half of the year and it expects the impaired element to have increased by the end of the year by about €3.8 billion to €10.5 billion.
AIB said it continues to work closely with the NAMA team and said there is no reason to believe that the average discount applicable to its NAMA loans will fall outside the Finance Minister's guidance of 30%.
The bank said that it it expects to see operating profits in all of its divisions - Ireland, Capital Markets, UK and central and eastern Europe despite the very difficult operating environment.
The bank said that diverse multinational sources of income and intense management of its cost base is driving an expected underlying operating profit of around €2 billion in 2009 before bad debt provisions.
AIB says its Capital Markets division continues to perform very strongly, and its operating profit is expected to be ahead of the level seen in 2008. It added that its Polish operations will see a broadly similar operating profit in 2009 compared to 2008.
However, income pressure and the cost of customer deposits is the main reason for the expected fall in operating profits in its Irish and UK divisions.
Pace of deterioration in loan book slowing
AIB said that the deterioration in its overall loan book continues, but that the pace of that deterioration is slowing. It said that reflects the significant portion of the book already 'criticised' rather than any material improvement in the quality of the book or operating conditions.
It said the increase in criticised loans in the second half of 2009 is expected to be much less than the €18 billion increase in the first half of the year.
The bank, in which the Government has a 25% stake, says that weak demand for credit is likely to result in year end customer loans being broadly in line with last year. Increased bad loans is expected to reduce year on year lending by around 4%, it added.
It said the low level of demand for loans is most apparent in Ireland, despite what it called its reaffirmed commitment to the domestic market. It said that the stability in its customer deposits seen in the first half of the year has continued and the full year balance is set to increase over the first half level.
On funding, AIB said that it has raised a total of €1.75 billion of term funding in two separate bond issues for three years and five years respectively. The bank said there was strong demand for both issues, which were heavily oversubscribed by a wide range of overseas investors.
AIB shares closed up 1.5% to stand at €1.78 in Dublin.
