Bankers will feel pain like everyone else, says Lenihan
Minister gets tough as bailed-out lenders start paying bonuses again
Published 04/07/2010 | 05:00
FINANCE Minister Brian Lenihan has issued a warning to Irish banks supported by the taxpayer, as it emerged that some financial institutions have resumed paying bonuses to senior staff in their overseas operations.
In an interview with this newspaper, Mr Lenihan ruled out a return of bank bonuses even after the ending of the bank guarantee, saying bankers have to take their pain like everybody else.
"Well, under the guarantee arrangement, as you know, the banks were forced to abolish the bonuses in recognition of the commitment made by the taxpayer and they couldn't have these bonuses. And remember, some of these generous bonuses incentivised much of the reckless lending that has led us here. We can't go back to those mad bonuses," he said.
Despite the €30bn cash injection and the turmoil in the markets, it has emerged that senior staff at Allied Irish Banks (AIB) and Bank of Ireland (BOI) in some overseas operations are being paid bonuses in order to prevent what the banks say is a "mass exodus" of talent.
Earlier this year, the banks confirmed that no discretionary bonuses would be paid for 2009. However, it has emerged that contractual bonuses are being paid out, and the number of such bonuses is far higher than suggested by the institutions.
AIB made the payments towards the end of 2009 as staff in the US threatened to sue when the bank decided not to pay already-announced bonuses for 2008.
Bank of Ireland said it does not intend to pay discretionary bonuses to any UK staff. But staff at some of its better-performing divisions are still in receipt of "previously contracted bonuses".
The Sunday Independent has also learned that senior bank executives are under immense pressure to have bonuses restored by furious Irish-based staff. It has also emerged that staff within both AIB and Bank of Ireland are considering legal action over the non-payment of bonuses.
When asked would they return once the original bank guarantee ends in September, Mr Lenihan said there could be no return of bonuses at banks that have been in receipt of taxpayers' money and those in the banks must share the pain being felt by people throughout Ireland.
"I don't envisage a substantial change on this issue," the minister told the Sunday Independent. "I have been Minister for Finance for two years at a diminishing fraction of what some bankers are paid. Bankers have to realise everyone has had to take real pain and they will have to take theirs as well."