AIB chooses Bernard Byrne to take over as chief executive from David Duffy

AIB has sought permission from regulators to appoint Bernard Byrne as its new chief executive in succession to David Duffy, who resigned from the post in January.

Mr Byrne is currently director of retail and business banking. His appointment has already been given the green light by the Department of Finance, which manages the State's 99.8 per cent shareholding in AIB, and now awaits the approval of the Single Supervisory Mechanism (SSM), an arm of the European Central Bank that took over regulation of euro zone banks late last year.

This is the first time the SSM has had to approve the appointment of a bank CEO and the timing of an announcement is not clear. One source said that it could be well into May before approval is received.

It is understood that Mr Byrne was the leading internal candidate, ahead of Fergus Murphy, the bank’s director of products. Both are believed to have made a shortlist alongside two external candidates.

Both AIB and the Department of Finance declined to comment yesterday on the choice of Mr Byrne as the bank’s next chief executive.

Mr Byrne is also president of the Banking & Payments Federation Ireland, a role he assumed in January from Mr Duffy, after the AIB chief executive announced his decision to join Clydesdale Bank in Glasgow.

Assuming he receives approval from the SSM, Mr Byrne will be tasked with returning AIB to private ownership and repaying the State its €20.8 billion in bailout cash.

Earlier this year, the Government appointed Goldman Sachs to assess AIB’s capital structure in advance of a potential sell-off.

Minister for Finance Michael Noonan has suggested that an IPO of up to 25 per cent of the bank could take place as early as this year.

AIB returned to profitability last year and Mr Byrne will be charged with continuing the bank’s return to normalised lending. His other tasks will include dealing with the bank’s sizeable mortgage arrears, resolving its SME debts, and dealing with the thorny issue of high standard variable rates.

In addition to its equity holding, the State also holds €3.5 billion in preference shares and €1.6 billion in contingent capital notes.

AIB has already indicated that it will pay a first dividend on the State’s preference shares in May, a payment that will amount to €280 million.

Mr Byrne joined AIB in May 2010 as group chief financial officer. Since then, he has held a number of leading roles including director of personal, business and corporate banking.

He is also an executive director of the AIB board and a director of EBS, the former building society that was folded into AIB in 2011 as part of a restructuring of the sector by the Government.

Mr Byrne is a chartered accountant by profession. He was group finance and commercial director of the ESB from 2004 until joining AIB.