For Immediate Release 26(th) July 2011
Allied Irish Banks, p.l.c.
Extraordinary Meeting
EXECUTIVE Chairman Mr. DAVID HODGKINSON's Speech
("AIB") (NYSE: AIB) Chairman's speech to AIB Extraordinary
General Meeting in AIB Group, Bankcentre, Ballsbridge, Dublin 4,
Ireland
Check against delivery
Good morning ladies and gentlemen and welcome.
My name is David Hodgkinson, and I am the Executive Chairman of
AIB.
We have significant business to conduct today with two separate
meetings, so, before we commence with proceedings, allow me to
explain the sequence of events as they will occur.
We will shortly commence with the EGM at which you will be
requested to consider and vote upon 7 separate but
inter-conditional resolutions to facilitate the receipt of capital
from the State.
When the EGM finishes, we will break for between 20 and 30
minutes to collect your votes and to allow you to stretch your
legs. Some light food and refreshments will be available during
this break.
We will then commence the AGM and carry on until all business is
complete. You will then be requested to vote on the AGM
resolutions.
Some further refreshments will be available at the end of the
proceedings.
You will be given every opportunity during both meetings to
comment and/or ask questions.
We have a quorum, so I now formally open the EGM.
The Notice of the Meeting was posted to Shareholders on the
2(nd) of July 2011, and so I will dispense with its formal
reading.
I'm joined on the platform on my far right by Paul Stanley, our
Acting Chief Financial Officer, to my immediate right by Bernard
Byrne, Director of Personal & Business Banking, to my immediate
left by David O'Callaghan, our Company Secretary, and on my far
left by Bryan Sheridan, our Group Law Agent.
The other Directors are present in the room, with the exception
of Mr. Collier, who sends his apologies.
In my capacity as your Chairman, I want to repeat very clearly
that my colleagues on the AIB Board, and I, wish to express our
deep regret to all our shareholders for the events which have led
us to the position we are in today.
We remain acutely conscious of the enormous erosion in
shareholder value which has occurred and the real hardship for many
shareholders brought about as a result.
It has to be said yet again by people like me, so that we cannot
forget, that serious mistakes were made in this Bank which can't be
allowed to happen again.
The Government has had to put an enormous amount of taxpayers'
money into AIB in order that we can help put things right both for
our customers and the wider economy.
So AIB exists today on the strength of the support of the Irish
Government on behalf of taxpayers.
I will again put on record our acknowledgement of, and gratitude
for, that support and for the key role that the Government and
taxpayers continue to play in helping us deal with the
unprecedented events which this Company faces.
In turn, the Government rightly expects rigorous governance,
protection of its investment and appropriate behaviour by the
Company's board and management.
Also too, that the bank should play as big a part as it can in
the recovery of the economy.
These are the minimum expectations also of our many shareholders
and customers.
I can tell you that my Board colleagues, Senior Management and
I, all subscribe to the Government's expectations and, so, the Bank
is going through an extensive restructuring programme that
incorporates organisational size, staff, business focus, culture
and governance, all of which is designed to prevent a repeat of the
disastrous and far reaching crisis.
However, I am also realistic about the scale of the challenge
and it will take time to get us to where we need to be, but I am
confident that our efforts will ultimately be successful.
The new pillar bank has been formed, including our new
subsidiary, the EBS, and we will have very strong capital ratios
that put us in a position to aggressively seek out deposits from at
home and abroad with renewed confidence and to demonstrate safety
and security to depositors.
At present those depositors remain distracted by the sovereign
story but that will abate as a consequence of the Irish Government
continuing to do the right things and what I hope will be a
cohesive response across Europe to the wider-European problems.
We look forward as a pillar bank to playing a leading role in
attracting funds back to Ireland.
Since I met with you here in November last year, immediately
following my appointment as Executive Chairman, there have been
many developments which have significantly altered the fabric of
AIB.
The level of change is apparent in that there is no member of
the executive committee, the bank's top executive team, that was in
office before 2010. At Board level, following this afternoon's AGM,
there will not be any Board members remaining that were in place
prior to 2009.
We have moved to change the structure of the organisation to put
customers at the heart of what we do. The customer facing
businesses are being supported centrally by specialist functions
and services.
Our risk framework and policies are being significantly
strengthened so that the problems we suffered can never recur.
The non-core unit is in place and performing ahead of
expectations. Non-core assets are those that no longer fit with
AIB's new strategic direction, and some businesses or portfolios
which represent excessive risk or offer a poor return profile.
These businesses will be disposed of, wound down or reduced in size
over time.
A specially designated transformation delivery unit is also up
and running and transformation priorities have been agreed.
Top management appointments have now been made following a very
rigorous selection process which has closely examined people's
leadership values and behaviours.
We have a good mix of people from inside and outside AIB with
many internal AIB people taking on new or changed
responsibilities.
Following these changes, AIB will have a strong foundation from
which a profitable business can be rebuilt and will be well
positioned in the market as one of the two pillar domestic Irish
banks.
And our intention is to achieve these changes without losing
sight of our key objectives of supporting our customers through
this challenging period and helping to revitalise the national
economy.
Both business and personal customers have been sending us a
strong message through workshops, seminars and focus groups held
around the country, that they want better access to well trained
people who can engage constructively with them.
To make that possible, we need to improve our processes and, in
particular, we have begun paying yet further attention to this in
dealing with mortgage customers in arrears and providing support
and access to SMEs.
In relation to mortgage arrears AIB has now fully implemented
the standards set out by the regulator for ensuring all banks are
dealing with customers in difficulty with their mortgage arrears in
a professional and timely manner.
We are providing increased training to our staff and we are now
encouraging customers who feel they are already in difficulty with
their mortgage, or who are aware of changes in their circumstances
in the short or medium term that will put them into difficulty, to
contact us so that together we may consider the options
available.
This is a very stressful situation for customers and we will do
all we can to ensure that AIB provides professional support to
customers when they come to us to discuss this issue.
In relation to small and medium-sized businesses, we must
provide genuine access and assistance.
Our customers feel disconnected and even though there is money
to lend, people feel they cannot get access to it.
So we have to help our customers better understand the
information we need so that we can lend to them. We also need to
make interaction between our customers and ourselves easier and
more productive.
So far, in pursuit of that vital goal, we have simplified the
processes for customers. We are tracking and following up on all
loan requests by businesses. We are better training staff to deal
with businesses and deploying them where they are most needed.
Our aim is to demonstrate that we want to lend and to
re-establish ourselves as trusted advisers to our customers and
supporters of viable businesses.
To achieve our objectives, we require capital.
We are now nearing the end of a long sequence of capital raising
actions that has included business acquisitions and disposals, and
a series of liability management exercises that has seen us buy
back virtually all of our subordinated debt at a significant
discount for bondholders.
Today, we are seeking shareholder approval for the final action
in the recapitalisation of AIB and our new subsidiary, the EBS.
In March, the Central Bank stated that it had set a new capital
target for AIB and EBS, requiring an additional EUR14.8 billion in
Core Tier 1 Capital.
The raising of this additional capital will be achieved by way
of;
1. a Placing of shares with the National Pensions Reserve Fund Commission
on behalf of the State, which will generate EUR5 billion in capital, in
return for the issue of 500 billion new Ordinary Shares;
2. the issue of Contingent Capital Notes to the Minister for Finance, which
will generate EUR1.6 billion;
3. Liability Management Exercises during May and June of this year, a form
of burden-sharing in which the Bank buys back its debt from subordinated
bond holders at a discount, and which will have generated over
EUR2 billion in capital; and
4. a capital contribution to be made by the State to make up the balance of
the required EUR14.8 billion, once the Minister is satisfied that an
appropriate level of burden-sharing has been achieved with the
bondholders.
Should the resolutions be approved today, and arising from the
issue of the new shares, the Government will own 99.8% of the total
issued Ordinary Shares.
By strengthening the Group's capital position, the Directors
believe that the Proposals should facilitate the Group's objective
of providing for a sustainable future as a systemically important
bank, which will continue to support our customers and contribute
to economic recovery.
In forming this belief, the Board has taken into account the
absence of any viable alternatives to raise the necessary capital
to meet the Central Bank requirement, and also the fact that the
sole provider of the required capital, the State, is willing to
provide the requisite capital on the terms described in the
Circular only.
Accordingly, the Board recommends to Shareholders that you vote
in favour of the Resolutions.
We will now hear questions and comments from the floor,
following which we'll consider and vote upon the resolutions.
My intention is to allow as many people as possible to speak and
to try and respond to your questions and comments as clearly as I
possibly can.
So, first question please...
-ENDS-
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Source: Allied Irish Banks, p.l.c. via Thomson Reuters ONE
[HUG#1533437]
For further information please contact: Alan Kelly Director of
Corporate Affairs & Marketing AIB Group Dublin Tel:
+353-1-6412162 email: Email Contact Ronan Sheridan Group Press
Officer AIB Group Dublin Tel: +353-1-6414651 email: Email
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