Postbank paid last bonuses before guarantee
POSTBANK, the joint venture between An Post and BNP Paribas, was the last bank to pay out a bonus to senior staff before government restrictions were introduced, Department of Finance records show.
Six senior managers were paid 7.5pc of their salary. The Government was unable to prevent the payments because they had been agreed before the State-guarantee scheme was introduced in September 2008.
A briefing document on the bonus issue provided to Finance Minister Brian Lenihan said the Postbank managers and Irish Nationwide chief executive Michael Fingleton were the only parties paid bonuses for work done in 2008. Fingleton received €1m.
In relation to Postbank, the department's records state: "The terms of the guarantee scheme could not prohibit the payment of contracted bonuses that pre-date the scheme and in this light a pre-contracted bonus was paid to six senior managers of Postbank.
"However, it must be borne in mind that these managers agreed to a vastly reduced bonus of 7.5pc of fixed remuneration, from a high of 40pc."
Postbank indicated yesterday that the amounts paid in 2008 were relatively small, although it declined to say to whom the bonuses had been paid. The company said: "A total of €66,627 was paid for performance related to achieving the objectives of the company prior to September 2008 to two executive directors and four other senior managers.''
It added that no bonuses will be awarded by the bank during the period of the State-guarantee scheme, which will run out in September 2010.
The department has no legal powers to compel Fingleton to repay the €1m bonus, although Brian Lenihan has talked about encouraging such a move.
Postbank decided to join the guarantee scheme despite not having any property exposures.
Its chief executive is subject to the same pay ceiling as those of the other major banks.
The banks can pay a CEO more than €500,000 in "exceptional circumstances'', but only with the consent of Mr Lenihan.