Allied Irish Banks CEO leaving to run NAB's UK business (updated)

Shawbrook

19/01/2015 20:57

(Repeats story published late Monday; no changes to text) 
    * Duffy named CEO of National Australia Bank's Clydesdale 
    * Clydesdale preparing for stock market listing or sale 
    * Clydesdale has been hit by conduct charges, bad loans 
 
    By Padraic Halpin and Matt Scuffham 
    DUBLIN, Jan 19 (Reuters) - Allied Irish Banks  ALBK.I  (AIB) 
Chief Executive David Duffy is leaving to run National Australia 
Bank's  NAB.AX  troubled British business which he will try to 
revive ahead of a planned sale or stock market listing. 
    Duffy will take over as CEO at National Australia Bank's 
Clydesdale Bank within the next few months, NAB said, as it 
looks at ways to leave Britain after years of poor performance 
and high charges to compensate customers for mis-selling. 
    The announcement comes just a week after the Irish 
government appointed advisers to kick off the sale of its AIB 
shares. Duffy joined AIB at the end of 2011 and has guided the 
99-percent state-owned bank back to profit.  ID:nL6N0UR1G1  
    NAB, Australia's fourth-biggest lender by market value, said 
in October it had made an exit from Britain an "absolute 
priority" and was looking at options including a sale or initial 
public offering.  ID:nL4N0SO83K  
    Duffy will need to get the business into strong enough shape 
 to attract investors in an already crowded market.  
    Virgin Money  VM.L , TSB  TSB.L  and OneSavings Bank 
 OSBO.L  listed last year and the British government is also 
selling its shares in Lloyds Banking Group  LLOY.L .  
    Clydesdale's appeal to investors has been hit by he cost of 
writing off property loans which turned sour and charges for 
mis-selling loan insurance and complex hedging products. 
    "It does need a tidying up and presenting in a better form. 
It's not as though investors don't have choice in terms of 
picking up challenger banks," said Shore Capital analyst Gary 
Greenwood. 
     
    SALARY GAP 
    NAB paid 420 million pounds ($635 million) for Clydesdale 
Bank in 1987 and 900 million pounds for Yorkshire Bank three 
years later. 
    The business has around 300 branches and industry sources 
say it provides 2-3 percent of small business lending in Britain 
and about three percent of personal current accounts. 
    Duffy will remain in position at AIB to support the board in 
identifying his successor with his final departure date to be 
agreed, the bank said. 
    Ireland's finance minister, Michael Noonan, who last week 
appointed Goldman Sachs  GS.N  to advise on the sale of AIB, 
said Duffy would leave the bank in about six months and that he 
would consult AIB Chairman Richard Pym in the coming days to put 
in place a process to recruit a new CEO. 
    Noonan said if Duffy had stayed for the next phase of the 
bank's recovery, it would have meant another 4-5 years and "that 
level of commitment was too long" for him. 
    Bank executives in Ireland are subject to a 
government-imposed salary cap of 500,000 euros ($678,600). Duffy 
took a pay cut as part of bank-wide wage reductions, reducing 
his salary to 425,000 euros last year. 
    Duffy's predecessor as Clydesdale chief executive David 
Thorburn, who quit earlier this month, was paid an annual salary 
of  955,000 pounds. The bank declined to comment on how much 
Duffy would be paid. 
    The appointment of an adviser last week marked a stepping 
stone in Ireland's bid to begin to recover the 21 billion euros 
spent on rescuing the country's second-largest bank by assets. 
No transaction is expected until the second half of 2015 
    Noonan, who believes the state can recover the full amount 
over time, said he did not expect the resignation to damage 
those attempts, although Merrion Capital analyst Ciaran 
Callaghan said the timing was likely to be an unwelcome 
development in the sales plan.  
    Ireland increased its valuation of its AIB investment to 
13.3 billion euros at the end of last year, meaning it will need 
to sell the bank at a significantly higher value to break even. 
 ($1 = 0.6602 pounds) 
 
 (Additional reporting by Steve Slater and Conor Humphries; 
editing by Jason Neely and Keith Weir) 
 ((padraic.halpin@thomsonreuters.com; +353 1 500 1529; Reuters 
Messaging: padraic.halpin.thomsonreuters.com@reuters.net)) 
 
Keywords: AIB MOVES/CLYDESDALE