By Paul Clarke
But has the bank been actively hiding this fact, or has the government just been slow in chasing up the details?
Parliamentary questions now seems to be the place where details of Irish banks’ remuneration practices come to light. It is, after all, an easy way for politicians to score some points and create more scathing banker-bashing headlines.
Some new controversy has emerged over the fact that BoI may have been paying some performance-related bonuses since coming under the government bank guarantee scheme, despite telling the Department of Finance in December that nothing had been paid over the course of last year.
Joan Burton TD highlighted this fact during a December parliamentary question, and has since described the payments as “one further act of deceit” by BoI, while Brian Lenihan has assured us that an “urgent investigation” was underway.
But is all this just a matter of semantics? BoI hasn’t revealed any figures about bonus payments, but said in a response to the Department of Finance enquiries on 1 December that no performance-related bonuses were paid “with respect to the financial years to March 2009 and December 2009”.
However, it also added:
“A small number of people at middle management level received payments which reflected either guarantees which were agreed on their joining the Group or deferred payments where the historic performance criteria had been achieved and the payment was deferred over several years. For commercial reasons BoI do not disclose the amount of such payments. The bank advises that it had no legal discretion in these matters.”
In other words, performance related bonuses are not being paid, unless the bank already has contractual arrangements to do so, and it’s suggesting it isn’t necessary to divulge figures. What’s more, it’s made no attempt to see if it is legally bound to pay these, as AIB did over the now well-known deferred 2008 bonus payments for its capital markets division.
Undoubtedly, BoI has been evasive on this matter, having avoided producing any figures on bonus payments, despite the fact that all the other Irish institutions under the guarantee have, but you can hardly accuse it of active deception.
Instead, surely it’s the government’s responsibility to chase this matter up, considering the political sensitivity around banker bonuses in Ireland and the greater influence it now has on the institutions. By failing to do so, it gives yet more ammunition to the opposition parties and fans the flames of public outrage over banker bonuses.
Below is the table submitted to Brian Lenihan by Irish banks (BoI excepted) detailing their bonus payments over the last two years. Most have drastically scaled back both the sums paid out in bonuses and the number of people receiving them:
Last year the bank told the Government it had not paid any performance-related bonuses to staff since the guarantee in September 2008.
Following subsequent queries by Department of Finance officials, it has emerged the bank did not disclose millions it paid out as part of contractual bonuses, which also have a performance-related element.
Neither the bank nor the department would comment last night on the scale of the bonus payments or how many staff benefited until investigations are completed. However, one well-placed source said the figure would be at least several million euro.
Other banks covered by the guarantee scheme have paid out a total of almost €46 million in bonuses between 2008 and 2010.
Anglo Irish Bank was responsible for some €20 million in bonus payments in the last months of 2008. AIB also paid out about €20 million, the bulk of which went to overseas staff. The sums recorded for Bank of Ireland were nil.
The latest information on bonus payments has come to light following a parliamentary question by Labour’s finance spokeswoman Joan Burton TD.
She said yesterday that the bank’s failure to disclose the payments was an “act of deceit” and an “astonishing display of arrogance and contempt” for the Government.
Minister for Finance Brian Lenihan said the bank’s chief executive had acknowledged the difficulties caused as a result of the misinformation and apologised unreservedly.
Mr Lenihan said he was undertaking an “urgent investigation” into bonus payments made since the guarantee scheme and of additional payments the banks may have intended making in the future.
The Minister said previous information given to his department that indicated that no performance-related bonuses were paid to staff was incorrect, as it did not take into account “contractual bonuses” which were performance related.
A spokesman for Bank of Ireland yesterday said there was never any intention on behalf of the bank to mislead the department.
He said some of these bonuses had not been classified as performance-related and were typically paid because of legal obligations or arrangements which predated the bank guarantee scheme.
Ms Burton, however, said it beggared belief that the bank did not have data on bonuses at their fingertips. “It is money from the taxpayer and a State guarantee that are keeping the Bank of Ireland afloat,” she said.