Ireland forces AIB to cancel bonuses
Discussion
Heard on the radio this morning, Grauniad link here.
Lawsuits being prepared as we speak?
Lawsuits being prepared as we speak?
The Grauniad said:
Ireland's finance minister has forced one of the country's debt-ridden banks not to pay a controversial €40m (£34m) bonus to its top staff.
Allied Irish Bank (AIB) announced this evening that it would no longer pay out the money, news of which had caused widespread outrage across the Republic at the weekend. Opposition politicians had threatened to introduce emergency legislation to the Dáil to take more than 90% of the bonus had the bank gone ahead.
In a letter to AIB, minister Brian Lenihan warned the bank that state support to shore it up was conditional on the non-payment of the bonus fund. Lenihan told AIB that "no matter when they have been earned" there would be no bonus payments to around 2,500 staff.
Lenihan said: "I appreciate that AIB was not in a position to put up a sworn defence in the high court proceedings and that the executive chairman and the board have acted with complete propriety in this matter."
His cabinet colleague, the health minister Mary Harney also criticised the AIB's original decision on the bonus payments. She said: "Clearly the bank's ability to pay is very much in doubt given the state of the bank and the huge amount of capital the exchequer, on behalf of the taxpayer, have had to invest in the bank.
"At a time when the exchequer is putting a huge amount of capital into AIB, everyone has to be mindful of their responsibilities, and that includes management, the board and the government."
The bank said that its legal advice had been that it was obliged to pay the bonuses, but that the minister's intervention overtook that obligation.
"The bank very much appreciates the support it has received to date from the state and the Irish taxpayers and acknowledges that it will continue to rely on this support for some time to come," AIB's statement said. "Accordingly, the board has decided not to pay the bonuses."
AIB executive chairman David Hodgkinson said the bank was "relieved" to be in a position not to pay the bonuses.
The bank, which has received €3.5bn from the government in assistance, was due to pay the bonuses for 2008 as a result of a high court ruling earlier this year. A staff member had taken a legal action all the way to the Dublin high court to force the bank to pay him his bonus.
AIB is already 19% owned by the Irish state but has been told it needs to raise a further €5.2bn by the end of February, although this is likely to come from the €85bn International Monetary Fund and European Union rescue package for Ireland rather than the private sector.
This will take the bank almost entirely into state ownership and the discovery that bankers were to receive bonuses deferred from 2008 – when the problems at the bank surfaced – prompted a furious reaction from opposition MPs.
Tonight the main opposition party Fine Gael said the Irish government should now use its powers to call an extraordinary general meeting of the bank to discuss the bonus issue.
Fine Gael teachta dála Dr James Reilly pointed out that since the state will own more than 90% of AIB, the finance minister was now a major shareholder in the troubled bank.
"As an AIB shareholder he could call on fellow stakeholders to support our call for an emergency general meeting so the full facts of the €40m in bonuses could be fully explored," he said.
Irish Labour leader Eamon Gilmore went further and said that the board of AIB should be fired if it was party to the decision not to contest the legal action.
Allied Irish Bank (AIB) announced this evening that it would no longer pay out the money, news of which had caused widespread outrage across the Republic at the weekend. Opposition politicians had threatened to introduce emergency legislation to the Dáil to take more than 90% of the bonus had the bank gone ahead.
In a letter to AIB, minister Brian Lenihan warned the bank that state support to shore it up was conditional on the non-payment of the bonus fund. Lenihan told AIB that "no matter when they have been earned" there would be no bonus payments to around 2,500 staff.
Lenihan said: "I appreciate that AIB was not in a position to put up a sworn defence in the high court proceedings and that the executive chairman and the board have acted with complete propriety in this matter."
His cabinet colleague, the health minister Mary Harney also criticised the AIB's original decision on the bonus payments. She said: "Clearly the bank's ability to pay is very much in doubt given the state of the bank and the huge amount of capital the exchequer, on behalf of the taxpayer, have had to invest in the bank.
"At a time when the exchequer is putting a huge amount of capital into AIB, everyone has to be mindful of their responsibilities, and that includes management, the board and the government."
The bank said that its legal advice had been that it was obliged to pay the bonuses, but that the minister's intervention overtook that obligation.
"The bank very much appreciates the support it has received to date from the state and the Irish taxpayers and acknowledges that it will continue to rely on this support for some time to come," AIB's statement said. "Accordingly, the board has decided not to pay the bonuses."
AIB executive chairman David Hodgkinson said the bank was "relieved" to be in a position not to pay the bonuses.
The bank, which has received €3.5bn from the government in assistance, was due to pay the bonuses for 2008 as a result of a high court ruling earlier this year. A staff member had taken a legal action all the way to the Dublin high court to force the bank to pay him his bonus.
AIB is already 19% owned by the Irish state but has been told it needs to raise a further €5.2bn by the end of February, although this is likely to come from the €85bn International Monetary Fund and European Union rescue package for Ireland rather than the private sector.
This will take the bank almost entirely into state ownership and the discovery that bankers were to receive bonuses deferred from 2008 – when the problems at the bank surfaced – prompted a furious reaction from opposition MPs.
Tonight the main opposition party Fine Gael said the Irish government should now use its powers to call an extraordinary general meeting of the bank to discuss the bonus issue.
Fine Gael teachta dála Dr James Reilly pointed out that since the state will own more than 90% of AIB, the finance minister was now a major shareholder in the troubled bank.
"As an AIB shareholder he could call on fellow stakeholders to support our call for an emergency general meeting so the full facts of the €40m in bonuses could be fully explored," he said.
Irish Labour leader Eamon Gilmore went further and said that the board of AIB should be fired if it was party to the decision not to contest the legal action.
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