Business Irish

Sunday 4 December 2016

Thousands of staff hit in share fall

Siobhan Creaton

Published 30/10/2010 | 05:00

Thousands of AIB staff are among the bank's small shareholders who are nursing huge investment losses as a result of the collapse of the bank's share price. As well as wiping out the value of their shares, many are also still repaying loans they took out from AIB to pay for the shares.

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Bank officials routinely purchased AIB shares as part of the bank's profit-sharing scheme, which included tax incentives to encourage buying shares instead of cash bonuses.

They could also borrow funds from the bank up to a maximum level of €12,500 to purchase additional shares, which, if held for three years, were not liable for income tax, according to the bank. AIB said that in some cases it accepted these shares as security on staff loans.

Payments

Many AIB bankers also accepted additional shares in lieu of cash dividends. Over a 20-year career, some would have acquired thousands of shares.

In a number of cases, where husbands and wives both work for AIB, their losses are enormous.

These shareholdings were often used to fund children's education or as a nest egg for retirement.

The bank's former chairman Dermot Gleeson is also nursing a huge investment loss on his 400,000 AIB shares, once worth €6m but now with a value of about €140,000.

The prospects for AIB shareholders are grim. The Government is set to take a 90pc stake in the bank in December as part of the bailout which will further dilute their holdings.

They can only hope that in time the shares may be worth something but they are unlikely to ever recoup their losses.

Irish Independent

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