AIB pension deficit heads for €800m despite €1bn injection
Published 01/04/2013 | 05:00
ALLIED Irish Banks pension deficit ballooned to nearly €800m last year, despite the bank pumping more than €1bn into the scheme.
According to the lender's financial statements, the pension deficit jumped to €789m in 2012, up from €763m a year earlier.
The increase came even as the bank controversially transferred assets with a face value of €1.1bn from its own balance sheet to the bank's pension scheme.
The loans had been listed for being sold off as part of the bank's deleveraging programme but instead were moved to the pension scheme in an effort to plug the deficit and help fund the bank's early retirement programme.
AIB is in the process of reducing its staff numbers by about 2,500 as part of a voluntary redundancy scheme and natural wastage.
More than 1,000 staff left the bank last year. Such a move was likely to have renewed pressure on the pension scheme, with many of the retiring staff on costly defined benefit schemes.
The decision to shift the funds to the pension fund was a controversial one when it was revealed last April.
The fund bought the loans at a significant discount to their face value, but it still led to accusations that the bank was using taxpayers' money to fund excessive pensions for executives that had been built up during the boom.
In November, the bank's chief executive, David Duffy, confirmed that some of the assets transferred from its balance sheet to its pension fund is helping to pay the "super-pensions" of former senior managers.
These include a €500,000 annual pension reportedly being paid to former chief executive Eugene Sheehy, who was in charge at the time of the infamous bank guarantee in 2008.
His successor, Colm Doherty, who has also left the bank, will get €300,000 a year when he turns 65.
AIB's pension deficit stood at more than €1.1bn in 2008 but fell back to €400m three years ago. It has almost doubled since then, however.
The widening pension deficit comes as it emerged that the banks are losing millions on repossessions.
AIB lost €14m on houses it took over and sold during 2012 at an average loss of €220,000 per house, with some houses going for less than 40pc of the value of the original mortgage, while PTSB saw €19m disappear on 127 houses it had taken ownership of and then sold.
Bank of Ireland was the most active of the three banks, repossessing 141 houses during 2012.
It did not reveal how much it made or lost on the sale of these houses other than to say the sale proceeds "were adequate to cover the loans after provisions".
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