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.