The Cabinet has signed off on a return of bonuses at a bailed out bank for the first time since the global financial crisis, in order for AIB to buy Goodbody Stockbrokers.
Finance Minister Paschal Donohoe has cleared the way for staff at Goodbody to be continue to be eligible to be paid bonuses even after a sale to majority state owned AIB is completed. Staff at the bank itself will still be subject to a pay cap and bonus ban, with the exception of 20 individuals who will transfer to Goodbody.
The €138m deal ends years of drift for Goodbody itself after two previous efforts to sell itself to Chinese investors fell through.
But the timing, in a week where partially state owned Bank of Ireland is cutting one-in-three branches is likely to be controversial.
The main beneficiaries of the sale will be Kerry based Fexco, which is Goodbody’s majority shareholder with a just over 50pc stake and management led by FAI chairman Roy Barrett, who is expected to stand down once the sale is completed.
AIB is buying the country’s second biggest stockbroker with its own funds but needed the Minister for Finance’s permission to pay bonuses to staff at Goodbody Stockbrokers.
The sale values Goodbody at €82m factoring in cash on its books.
Government imposed caps on pay and bonuses at bailed out banks, including AIB, have been in place since the banks were rescued by taxpayers.
AIB sought an exemption to allow it to pay bonuses to staff at Goodbody Stockbrokers, although the firm itself has not paid bonuses in recent years and even needed to take Covid pay supports from the state last year.
Even so AIB regards bonuses as a crucial element of pay for staff at the stockbroker where they are the industry norm.