'You don't deserve bonuses' -- Noonan's message to bankers
Published 30/01/2014 | 01:50
FINANCE Minister Michael Noonan has issued a blunt challenge to top AIB executives to either accept the ban on bankers' bonuses -- or leave the state-owned bank.
Ruling out reintroducing bonuses for top bankers, he said: "If any executive wants to leave AIB, I'll shake his hand and wish him fair passage as he leaves."
The tough comments came after it emerged that AIB chairman David Hodgkinson had held talks with officials at the Department of Finance in recent weeks aimed at the reintroduction of bonuses for top brass at the bailed-out lender.
Bonuses have been banned and pay has been capped at all of the rescued banks since 2009.
The bailout of AIB has cost taxpayers €21bn, around a third of the total cost of saving the banking sector.
Critics of the pay cap -- including the former financial regulator Matthew Elderfield and AIB deputy chairman Michael Somers -- have argued that the pay rules make it harder to attract talented managers who could maximise the State's chances of recovering cash from the banks.
But yesterday Michael Noonan ruled out bonus payments until AIB's performance improves and the State has reduced its stake in the bank.
"The answer is, sorry, guys, much better performance required before we'll even consider" bonuses, the minister said.
It was pointless for AIB to even raise the matter of bonuses, he added.
"While we're holding 99pc of AIB, there's no point in having those discussions with me," Michael Noonan said.
"It makes no sense and it's not a demand that I'm prepared to deal with."
He made the comments in New York at the headquarters of US media group Bloomberg. The Finance Minister is on a five-day visit to the US, accompanied by officials from the IDA and the National Treasury Management Agency.
The minister's tough stance was echoed by the chief economist at the Central Bank, Lars Frisell, who warned that bonus culture had been part of the problem in banking globally before the crash. The decision about AIB was for the Government but the Central Bank would want to ensure that bonuses didn't promote "the wrong kinds of behaviour," Mr Frisell said
"The kind of behaviour we all saw in many countries before the crisis, exaggerated credit growth etc from the Central Bank, that's the main concern, that's what we would be looking out for," he said.
Mr Frisell is stepping down from his job at the Central Bank to take up a new position next month with the IMF, based in Mauritius.
AIB's chief executive David Duffy joined the bank two years ago with his salary subject to the €500,000-a-year maximum pay cap introduced by the current Government.
He subsequently took a 15pc pay cut in 2012, along with other senior executives, under AIB's own cost cutting plans.
AIB has been loss-making since it was taken into state hands with a massive €21bn bailout, but is widely forecast to return to profit, or at least break even, this year.