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.
They will all pay out in compromise agreements to negate any legal claims. Then neither party can disclose the details and everyone is "happy". The Govt have taken a "hard line" stance (at least publicly) and the bankers have not got their bonuses (at least publicly, but in reality the bonuses have been paid.....
anonymous said:
[redacted]
Where are all these top bankers going?They are staying in the UK and Ireland because
A) They like it there
B) The government wont let them go bust.
Older people with families, kids in school etc aren't all going to relocate to bankers bonus meccas like Qatar or Dubai or Hong Kong, just because they can't still get a bonus.
Plenty of people outside the financial sector, through no fault of their own, aren't receiving the expected salary/pension/re numeration package. Unfortunately most of us work for companies that won't get bailed out by the tax payer.
anonymous said:
[redacted]
I have mixed feelings on the matter, I believe that contractual terms have to be honoured, but in the private sector if your employer is bust then it doesn't matter what has been promised, you can join the line behind the other creditors. Perhaps a better option for the Irish would have been to let AIB go bust and started AIB 2010, do they have pre-packs over there...
el stovey said:
anonymous said:
[redacted]
Where are all these top bankers going?They are staying in the UK and Ireland because
A) They like it there
B) The government wont let them go bust.
Older people with families, kids in school etc aren't all going to relocate to bankers bonus meccas like Qatar or Dubai or Hong Kong, just because they can't still get a bonus.
Plenty of people outside the financial sector, through no fault of their own, aren't receiving the expected salary/pension/re numeration package. Unfortunately most of us work for companies that won't get bailed out by the tax payer.
I have had a few friends do this over the years who I now get to visit for holidays etc so not all bad news! But just those 4 people alone who moved for various reasons but all related to taxation mostly and whose jobs were not replaced in the UK essentially removed I would guess £500k at least a year in tax revenue alone!
hornetrider said:
Blib said:
What ability? To line their own pockets with absolutely no regard to the consequences of their self serving actions?
Uh-oh.There are over 300,000 empty new builds in Ireland. Three hundred thousand! Are you suggesting that these financial wizards are not partly to blame for this?
Blib said:
hornetrider said:
Blib said:
What ability? To line their own pockets with absolutely no regard to the consequences of their self serving actions?
Uh-oh.There are over 300,000 empty new builds in Ireland. Three hundred thousand! Are you suggesting that these financial wizards are not partly to blame for this?
Blib said:
Although I agree with your 'brinkmanship' comment, remind again of the wondeful job these self same bankers did in the 'bubble years'?
What ability? To line their own pockets with absolutely no regard to the consequences of their self serving actions?
Someone whose dad works in a bank will be along to insult you soon and explain that any financial problems the country faces are nothing to do with the financial sector at all. What ability? To line their own pockets with absolutely no regard to the consequences of their self serving actions?
It was nothing to do with irresponsible lending and credit default swaps and other bonus driven gambling. It was all Bill Clintons fault because he made everyone do it. They didn't want to but Bill forced them to act in a way that they knew was irresponsible. They all knowingly acted against their shareholders interests and here we are today. It's not true though but never mind.
el stovey said:
Older people with families, kids in school etc aren't all going to relocate to bankers bonus meccas like Qatar or Dubai or Hong Kong, just because they can't still get a bonus.
Yes, they will. And are doing. A Front Office worker could expect to cut 20% off their tax bill in HK or Singapore, over 5 years, that buys you a nice pile back home (and you don't have to live in England, so it's a double benefit 
).Blib said:
hornetrider said:
Blib said:
What ability? To line their own pockets with absolutely no regard to the consequences of their self serving actions?
Uh-oh.There are over 300,000 empty new builds in Ireland. Three hundred thousand! Are you suggesting that these financial wizards are not partly to blame for this?
Soovy & Tonks LLP employees, spotted earlier:
Edited by hornetrider on Tuesday 14th December 10:28
550Hep said:
Blib said:
hornetrider said:
Blib said:
What ability? To line their own pockets with absolutely no regard to the consequences of their self serving actions?
Uh-oh.There are over 300,000 empty new builds in Ireland. Three hundred thousand! Are you suggesting that these financial wizards are not partly to blame for this?
550Hep said:
I am guessing but only guessing that bankers don't build houses!
No but they gave 'special loans' to property developers to build houses!http://www.guardian.co.uk/business/2010/mar/30/all...
el stovey said:
550Hep said:
Blib said:
hornetrider said:
Blib said:
What ability? To line their own pockets with absolutely no regard to the consequences of their self serving actions?
Uh-oh.There are over 300,000 empty new builds in Ireland. Three hundred thousand! Are you suggesting that these financial wizards are not partly to blame for this?
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