Former Permanent TSB chief executive David Guinane is suing the State-owned bank over the terms of his departure from the bailed-out bank.
Guinane had run Permanent TSB when it was part of the Irish Life & Permanent Group. The Permanent TSB unit was being spun off into a separate independent entity as part of the restructuring of the organisation. Guinane applied for the role of chief executive in the new bank.
However, the post was given to British banker Jeremy Masding in January 2012. The job is subject to the €500,000 pay cap.
Guinane is understood to have agreed an exit package with the board. However, the agreement turned to conflict within days. Legal records show that Guinane's lawsuit kicked off on January 27, 2012, 10 days after Masding's appointment was announced but before the banker was scheduled to leave the organisation in February 2012.
"We would like to thank David for the significant contribution he has made to the bank during his career and wish him every success for the future," Irish Life & Permanent TSB chairman Alan Cook said after Masding's appointment.
Guinane is represented by a heavy-hitting legal team including Liam Guidera from Mason Hayes & Curran. Affidavits were filed in July as part of preliminary legal skirmishes. Last week, a hearing relating to the case was adjourned in Chancery Courts until November. Irish Life & Permanent is represented by Cathal McCarthy solicitors.
The banker was one of the key insiders as Permanent TSB ratcheted up its exposure to the property market. He was extremely well-rewarded in his role, even being granted a mega-options deal in March 2008 – with the bank lurching towards a €4bn taxpayer bail out. He was conditionally awarded an options package worth up to €600,000. Those options turned out to be worthless as the group's share price was vapourised.
Guinane is now a financial consultant and chairs the National College of Ireland's Personal Finance Education group, which aims to educate people about their finance.
He was one of the first bankers to apologise for the industry's role in trashing the economy.
"As bankers, we must recognise first and foremost that this crisis has been caused by the failure of our sector to fully understand and manage the risks inherent in our business," he said in a speech at the Institute of Bankers in November 2009.
He said the banks had made poor judgements in regards to lending and investment, and that these errors had been made worse by poor corporate governance. In his role as president of the Banking Institute, Guinane added that the banking sector should express contrition and appreciation for the support it had received from the State.
Guinane had been instrumental in steadying the Permanent TSB bank after its €4bn bailout, inking a deal to bulk up its balance sheet by taking on €650m worth of deposits from Northern Rock's Irish customers in August 2011.
The banker had also introduced a new initiative to reduce its exposure to toxic tracker mortgages by offering incentives to persuade customers to pay off their loans early. He also fronted a move to slash staff numbers at the bank, with 280 job losses announced and a raft of branch closures as part of a savage restructuring.
He was also involved in the doomed move to merge Irish Life & Permanent with EBS and other banking debris to create a "third force" in Irish banking.
Guinane did not comment last week. Irish Life said that it would not comment on legal issues.