The bank, which is Ireland’s largest company, simultaneously announced completion of the merger between its Allfirst subsidiary in Baltimore and the M&T Bank Corporation. As part of the deal, AIB will sell its New York retail branch to M&T.
According to AIB, the Irish bank will continue to provide lending, treasury and advisory services to both the corporate and non-profit sectors from its other offices throughout the U.S., including New York, Philadelphia, Chicago, Atlanta, San Francisco and Los Angeles.
The move away from retail banking signals an end of an era in which many Irish in New York chose to bank with a familiar name from home rather than a U.S. bank.
Bank of Ireland operated a retail branch on Fifth Avenue for many years. It was closed back in the early 1990s and much of the branch’s business went to AIB on Park Avenue.
AIB’s ownership of Allfirst, meanwhile, had turned into a major financial liability as a result of a series of bad trades carried out by a now jailed currency trader, John Rusnak.
Rusnak was sentenced to seven and a half years in prison in January by a Baltimore court.
Rusnak, who covered up $691 million in bad trades over a five-year period, did not directly divert cash from the bank for his own use, but was paid almost $500,000 in bonuses for his “excellent” work even while losing millions in risky currency speculation.
An internal probe of AIB and Allfirst by former U.S. comptroller of the currency, Eugene Ludwig, blamed Rusnak for fraud, but also criticized AIB for lax management and poor oversight.
The Rusnak affair came to light last year when AIB officials from Dublin joined with Allfirst staff to publicly reveal Rusnak’s deceptive practices.
As a result of Rusnak’s actions, upper management was shuffled and AIB moved to sell off Allfirst to Buffalo, N.Y.-based M&T in the now completed $3.1 billion cash and stock deal.
Commenting on the merger of Allfirst and M&T, AIB Group CEO Michael Buckley said that the bank was pleased to have completed the merger within the timeframe first envisaged by the various parties.
“Excellent progress has already been made in the transition of Allfirst into M&T. This long-term partnership offers significant benefits to all our stakeholders and we look forward with confidence to a full and successful integration,” Buckley said.
As part of the merger deal, M&T CEO Robert Wilmers has been co-opted to the AIB board as a non-executive director.