Bonus bonanza for Anglo managers
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Senior staff at ruined Anglo Irish Bank have been paid what were described as "significant" end-of-year bonuses, in an action that will cause anger and dismay among taxpayers, who are being asked to bail out the bank with €1.5bn of public money.
The ailing bank, which is on the verge of collapse, confirmed last night that the "performance-related" bonuses were paid to "middle managers" at the bank, which has racked up colossal bad debts, with loans running into billions of euro.
But the company denied that its most senior executives had benefited in the end-of-year bonus bonanza.
However, a source told the Sunday Independent that some staff had been rewarded with "serious money" in the run up to Christmas.
One staff member was quoted as saying: "If we are going to lose our jobs, we will need the money."
And last night a spokeswoman for the bank confirmed that what were described as "middle management" did receive bonus payments, despite the bank's woeful financial state.
Speaking to the Sunday Independent, she said: "In December, it was decided that no bonuses would be paid to senior executives. Some middle-management figures did receive payments, which were performance-related."
The spokeswoman also said that the amount paid out was significantly less than what was paid the previous year.
It is believed that signing off on bonuses to management was one of the last acts of former chief executive David Drumm, who resigned on December 19 after the bank became embroiled in a scandal over loans to its former chairman, Sean FitzPatrick.
Shares in the bank went into freefall from a peak of €17.31 two years ago after it was revealed that Mr FitzPatrick had borrowings of €87m, which he hid each year from auditors -- and shareholders -- by transferring the huge personal loan to another financial institution.
His behaviour, which caused outrage among taxpayers who have been asked to bail out the bank, led to his resignation from the bank and other high-profile directorships. His exit was quickly followed by that of chief executive Drumm.
The Sunday Independent can also reveal that the Government and the Department of Finance have now drawn up a back-up plan to nationalise Anglo Irish Bank in conjunction with the re-capitalisation plan announced by Finance Minister Brian Lenihan last month. Nationalisation will occur if the bank is subjected to further turmoil on the stock markets in the coming days.
The current share price is just 19¢, up from an all-time low of 12¢ -- compared with a peak of €17.31 in May 2007.
Mr Lenihan announced that the taxpayer would be taking a 75 per cent stake in the bank at a cost of €1.5bn in the coming weeks, if the need for nationalisation doesn't arise. A change in legislation will be required to facilitate the capitalisation, and the bank would need to hold an Emergency General Meeting to agree the move.
However, senior government sources revealed this weekend that once trading resumes tomorrow, and if Anglo Irish Bank is once again subjected to a battering, then the Government will be left with no choice but to nationalise the bank, assuming all its debt. Leading economists and commentators have strongly questioned the logic in saving Anglo Irish Bank, saying the markets clearly believe it has no sustainable future.
NUI economist Alan Ahearne, speaking to the Sunday Independent, said: "The markets quite clearly don't believe in the future of Anglo, and yet the Government is saying it's too important to let go. I'm not convinced by this. There needs to be a much greater transparency about what is going on at the bank."
Although the Government is injecting €1.5bn, the bank itself is now only valued at about €250m.
- LIAM COLLINS and DANIEL McCONNELL
