Executives at AIB — the bank taxpayers have bailed out to the tune of €3.5bn so far — will share €40m in bonuses just before Christmas.
In a move certain to spark fury, the bank has decided about 2,400 staff must be paid the bonuses for legal reasons after several of them took court action.
Cheques for an average of €16,700 are likely to be sent out to executives on December 17. Staff last year received €54.9m in bonuses.
Paying the bonuses — for work at the height of the financial crisis — comes as taxpayers are smarting from having their incomes slashed in the Budget.
Shareholders are also likely to be furious after their AIB shares tumbled from €23.95 to just 50c over the last two years.
Ironically, the bonuses are for work done in 2008 when the bank came close to collapse before the Government stepped in with a taxpayer guarantee.
AIB’s shares have fallen by almost 60pc this year alone.
It is understood a large number of AIB staff have now taken legal action seeking their bonuses, agreed under contracts signed before the economic crash. A few weeks ago analysts put the total cost of the bonuses at no more than €10m, but this has now quadrupled. AIB declined to comment last night.
The €40m bonus is a significant chunk of the bank’s market value these days. The stock exchange values the entire bank, which was once the largest Irish bank until it was eclipsed by Bank of Ireland, at just €540m.
While the bank and the Government have halted so-called “discretionary” bonuses, it appears they have no legal power to stop bonuses included in the contracts of individual staff members.
Only yesterday, Finance Minister Brian Lenihan said he thought it was unlikely bonuses would be paid out for some time at the banks. He said until the banks were profitable again and made a “return” to the taxpayer, he didn’t think any bonuses would be sanctioned.
Despite this, the €250,000 semi-state pay cap announced in Tuesday’s Budget will not apply to bankers in state-owned institutions. This means those in charge of failed state-owned banks will still be able to earn twice as much as those in charge of successful state-owned companies.
The Department of Finance last night confirmed in a statement that it was “not intended that the (€250,000) cap apply to state-supported banks”.
It’s not the first time the bank has paid its own employees extra while the rest of the country was tightening its belt. In October last year the lender hiked salaries for 5,000 Irish employees by 3pc.
The taxpayer has already spent €3.5bn propping up AIB but the eventual size of the bailout is likely to be much larger. The bank said last week that it will need to raise €5.3bn of additional capital by the end of February to reach targets set by the Central Bank.
Most analysts expect the bank won’t be able to raise this amount, which will force the Government to effectively nationalise it.
The Government has also helped the bank by creating the National Asset Management Agency (NAMA) to buy distressed property loans — a plan by which NAMA “invests” billions to buy AIB loans after years of reckless lending. That money, like the bailout money, may or may not be recovered in future.
The revelations came as it emerged that the UK’s rescue loan to Ireland could increase if the economy here runs into trouble. Chancellor George Osborne conceded this yesterday as he refused to rule out similar action to help other troubled European states.
Mr Osborne said emergency legislation would be published today capping Britain’s loan at £3.25bn (€3.87bn). However, the bill will include a clause allowing the ceiling to be increased, subject to a vote in the Commons.
– Emmet Oliver and Thomas Molloy
Comment:here is another example of another cronie working with the banks
Bruton’s attempts to ‘sell’ Ireland slammed in Dubai Eamon Quinn
IFSC chairman and former taoiseach John Bruton: trying to attract more international banks to Ireland
Senior bankers in Dubai have criticised the timing of a presentation tomorrow by Irish government officials called ‘Ireland, the Financial Services Gateway to Europe’ because television in the United Arab Emirates has for weeks blamed Irish banks for helping to bring the euro to the edge of destruction.
The presentation by former taoiseach and EU ambassador to the US, John Bruton, who is also chairman of IFSC Ireland, in the Godolphin Ballroom in the Emirates Towers Hotel, one of the most expensive venues in the region, is part of the newly-created task force to attract more international banks to Ireland. But a senior banker complained that the timing could not have been worse.
“People in the financial services industry here are looking at Ireland as an economic disaster that was extremely badly managed by the government,” he told the Sunday Tribune.
“Remember that many industry professionals and investors got badly burned during the Dubai property crisis, which pales into insignificance compared to the Irish banking system. People are not going to be swayed by attempts to sell Ireland right now,” he said.
The banker said the idea of promoting Irish expertise and its position within the eurozone was a good idea “but not at this time”.
The conference, which had attracted 60 visitors, was important as a way to dispel negative headlines about Ireland, a spokesman for Enterprise Ireland said.
Coming one day after the most draconian budget in the history of the state again we see that Lenihan and Cowen are looking after their pals .The Labour party does not come out of this smelling of roses either as Sticky Dick Spring along with Declan Collier
is supposed to be the government appointed watchdog director’s for the taxpayers but as I have pointed out in earlier postings these cronies have gone native on us, just like Allen Dukes over at Anglo Irish Bank.A distinct flavour of I’m all right jack and thanks for the gig lads.
Then we have former taoiseach John Bruton
(This is the Gob**** that only a few weeks ago announced to the world that Ireland would payback every penny that our banks owed, this was the time Cowen and Lenihan were telling the Irish people that there was no need for us to go to the IMF or the EU ).We now know that the Irish banks have already borrowed 165 billion from the EU so far this year .Is this guy working for Goldman Sacks? It does tell you something when we have a former taoiseach in a position of chairman of one of the world’s largest front for hot money .The IFSC has 2.8 Trillion sitting on deposit and the government of Ireland gets a big fat zero .I wonder why? a charge of 1% would bring in 28 Billion into the government’s coffers overnight with Bruton loud mouthing the bankers cause it’s no wonder the government are afraid to tackle this obvious source of revenue .
X politicians working for the big banks says it all !
- Allied Irish Banks to pay €40m bonuses despite bail-out (telegraph.co.uk)
- Austerity Vote Creates All Green in Irish Stocks (AIB, IRE, IRL, RYAAY, ELN, WCRX) (247wallst.com)