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Allied Irish Banks has apologised for the €18bn of investors' money wiped out by years of mismanagement and reckless lending on property.
Executive chairman David Hodgkinson made his comments as the bank, which is now majority state-owned, reported a record loss of €10.4bn (£9.25bn) for 2010 and announced 2,000 job losses in the UK and Ireland.
"I want to acknowledge the very understandable hurt, anger and frustration of private investors who have seen the value of their investment fall by €18bn in the past three years," he said at AIB's annual results conference.
Losses were up from €2.3bn in 2009, reflecting the continuing decline in property values. They included a €7bn loss on property developer loans the bank was forced to sell at a discount to the National Asset Management Agency.
Hodgkinson said shareholders were entitled to feel "aggrieved" with the bank, whose catastrophic reading of the property market is second only to Anglo Irish Bank, whose collapse in 2008 precipitated the Irish banking crisis.
AIB is now 93% owned by the state but the government's stake is due to rise even further once it has sucked in the full €20.5bn earmarked in bailout cash. Hodgkinson said the bank "owed its survival to the taxpayer" but hoped it would retain some sort of stock market listing even if it was only for 1-2% of its capital.
His contrite words are seen as the start of the rehabilitation and rebirth of the bank, which is, along with Bank of Ireland, destined to become one of two "pillar banks" serving the domestic market.
A former chief operating officer of HSBC, Hodgkinson was appointed as an interim boss of the bank in October to set out a clear road map for the bank over the next five years.
His blueprint includes new management and a new chief executive, a new two-track structure, and the abolition of an old culture of "silo" operations that were costly and difficult to control.
He blamed the record losses on one of the "longest property booms" he had ever witnessed. "My opinion is that both Ireland and AIB have serious issues to be resolved. But I am convinced they both can and will recover. In AIB we are learning the lessons from past mistakes, but we must not get bogged down in despondency."
There had been "a collective madness" in the country, he said. "When the crunch came, it was very severe."
The bank expects to return to operating profits next year and hopes to have got all "the bad news" out this year. Hodgkinson acknowledged there were still concerns about bad debt in the buy-to-let sector but that future losses were contained in the "buffer capital" allocated by the state in the latest bailout.
There was a run on the bank last year and Hodgkinson revealed a "significant outflow" of deposits – €22bn in 2010, or more than €400m a week. He said since recent stress tests and the €13.3bn bailout announcement on March 31, the run appeared to have stopped.
He said the future "remained challenging" and much had yet to be done but Ireland had good fundamentals with an open economy, educated and competitively priced labour. "Our path back to profitability and to standalone strength will be difficult but entirely possible."
He outlined plans for a new slimmed down AIB structure with a new customer-focused "viable core" of retail and business banking that would be half the size of the existing operation by 2013.
Allied Irish Banks has apologised for the €18bn of investors' money wiped out by years of mismanagement and reckless lending on property.
Executive chairman David Hodgkinson made his comments as the bank, which is now majority state-owned, reported a record loss of €10.4bn (£9.25bn) for 2010 and announced 2,000 job losses in the UK and Ireland.
"I want to acknowledge the very understandable hurt, anger and frustration of private investors who have seen the value of their investment fall by €18bn in the past three years," he said at AIB's annual results conference.
Losses were up from €2.3bn in 2009, reflecting the continuing decline in property values. They included a €7bn loss on property developer loans the bank was forced to sell at a discount to the National Asset Management Agency.
Hodgkinson said shareholders were entitled to feel "aggrieved" with the bank, whose catastrophic reading of the property market is second only to Anglo Irish Bank, whose collapse in 2008 precipitated the Irish banking crisis.
AIB is now 93% owned by the state but the government's stake is due to rise even further once it has sucked in the full €20.5bn earmarked in bailout cash. Hodgkinson said the bank "owed its survival to the taxpayer" but hoped it would retain some sort of stock market listing even if it was only for 1-2% of its capital.
His contrite words are seen as the start of the rehabilitation and rebirth of the bank, which is, along with Bank of Ireland, destined to become one of two "pillar banks" serving the domestic market.
A former chief operating officer of HSBC, Hodgkinson was appointed as an interim boss of the bank in October to set out a clear road map for the bank over the next five years.
His blueprint includes new management and a new chief executive, a new two-track structure, and the abolition of an old culture of "silo" operations that were costly and difficult to control.
He blamed the record losses on one of the "longest property booms" he had ever witnessed. "My opinion is that both Ireland and AIB have serious issues to be resolved. But I am convinced they both can and will recover. In AIB we are learning the lessons from past mistakes, but we must not get bogged down in despondency."
There had been "a collective madness" in the country, he said. "When the crunch came, it was very severe."
The bank expects to return to operating profits next year and hopes to have got all "the bad news" out this year. Hodgkinson acknowledged there were still concerns about bad debt in the buy-to-let sector but that future losses were contained in the "buffer capital" allocated by the state in the latest bailout.
There was a run on the bank last year and Hodgkinson revealed a "significant outflow" of deposits – €22bn in 2010, or more than €400m a week. He said since recent stress tests and the €13.3bn bailout announcement on March 31, the run appeared to have stopped.
He said the future "remained challenging" and much had yet to be done but Ireland had good fundamentals with an open economy, educated and competitively priced labour. "Our path back to profitability and to standalone strength will be difficult but entirely possible."
He outlined plans for a new slimmed down AIB structure with a new customer-focused "viable core" of retail and business banking that would be half the size of the existing operation by 2013.
