AIB Denies Merger Rumours

by Jason Gorringe, Tax-News.com, London

30 May 2002

Allied Irish Banks, which lost $691m in a fraud at Baltimore-based subsidiary Allfirst Financial Inc., is not considering a merger, the chairman told shareholders at its annual meeting yesterday. During a speech that dwelled heavily on the trading losses at Allfirst and the steps taken to ensure the scandal would not be repeated, AIB Chairman Lochlann Quinn said the Dublin, Ireland-based company will grow on its own rather than merge with any other financial institution.

"My first duty is to apologize to you the shareholders for the lapses that allowed this fraud to occur," Quinn said. But then he insisted that there would be no merger, saying: "The focus of our growth strategy is not at all on merging AIB with any other company. The position of the AIB board is clear. Our aim is to grow AIB's business as an independent, multinational financial services company."

"We are interested in competing with Bank of Ireland not in merging with them," Quinn said. "We believe any such merger would be unacceptable on competition grounds and has not been and is not now on the agenda."

Quinn outlined steps taken by the financial institution, including the firing of some employees, a restructuring of management and treasury activities, and the company's cooperation with regulators.

"While the Allfirst fraud represented a very serious lapse in controls which should not have happened, the loss is a once-off charge to the business which is now performing well," Quinn said. He told shareholders that core deposits at Allfirst have remained stable in the wake of the scandal and are up over last year.

The meeting didn't go according to plan, however, when shareholder Niall Murphy, who had stepped up to the podium to challenge Mr Quinn and chief executive Michael Buckley over the scandal, was led away by security staff to cries of "No!" and "Bully!" at the Culloden Hotel in Holywood, Co Down.

Mr Murphy was later allowed back after promising not to approach the platform again. "It is appalling," he said, "It is shocking that a person who has spent months studying the report of the fraud and has prepared 15 minutes of comments and questions should be treated like this."

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