David Duffy move to Clydesdale to mean significant pay rise

Clydesdale Bank's announcement on January 6th that its chief executive David Thorburn was to stand down after four years in the role caused barely a ripple in Ireland - but the aftershock was felt in Ballsbridge on Monday when it emerged that AIB's chief executive David Duffy is to be his successor.

Two weeks ago, Thorburn said it was the right time to go and that the business required a five-year commitment that he didn't want to undertake. Similar sentiments were expressed in relation to Duffy's impending exit from AIB.

Why is Duffy leaving?

Remuneration has got to be one element. Duffy joined AIB in December 2011 on a salary of €500,000, in line with the Government’s cap. He later volunteered a 15 per cent pay cut.

Thorburn received £955,000 from Clydesdale last year and £1.5 million in 2013. So we can assume Duffy is getting a significant uplift in his pay.

There is another interesting element to the story. Clydesdale is effectively up for sale, after its parent National Australia Bank announced in October that it plans to quit UK banking. One view circulating on Monday was that Duffy might have a private equity buyer in mind or at least know where to look for one. He's hardly taking the Clydesdale job only to be turfed out on his ear after five minutes by a new owner.

A change of ownership would surely involve Duffy having some “skin in the game”, so to speak. By contrast, share options in AIB weren’t on the horizon.

His mission under new owners will be to make Clydesdale a challenger bank in a crowded UK market. Its total operating income last year was just £964 million and it made a loss of £178 million.

Duffy has clearly decided that the turnaround story for Clydesdale is more interesting than for AIB, which is back in profit and now on the road to privatisation and repaying the State its €20.8 billion bailout.