AIB staff paid 5pc on deposits as customers took lower rate
ALLIED Irish Banks has been paying staff significantly higher interest rates for deposits compared to ordinary customers despite the bank's dependence on the State for survival.
AIB staff have been paid 5pc for their deposits during the recession while customers who hold money on deposit with the bank often earn a fraction of this.
The perk, which has not been previously made public, is due to be phased out next month, according to a letter sent to staff.
The highest rate available to customers is 3.72pc, according to the bank's website. Most deposit rates are much lower than this.
The bank last month cut the interest it pays on a range of demand deposit rates for ordinary customers by up to 0.25pc.
AIB boss David Duffy said at the time that what he called "high-priced deposits" were putting the State-owned bank under pressure.
He blamed these high-cost deposits for the bank's failure to cut its variable mortgage rate despite the European Central Bank's decision to cut interest rates. He did not mention the much higher rates paid to AIB staff.
"Our products need to be priced above our cost of funding to avoid generating further losses for our shareholders," he said at the time.
The Irish Independent has learnt that the bank has recently written to staff to tell them that the 5pc rate will be abolished next month.
A spokesperson for the bank confirmed the rate was being phased out but declined to confirm the rate paid to staff.
The preferential rate will be scrapped along with a host of other perks such as generous pensions and cheap mortgages. The bank has also introduced pay cuts for senior staff of up to 10pc and a pay freeze for all staff until the end of 2014.
Employees who are currently part of AIB's defined benefit pension scheme will be switched to a defined contribution pension scheme. AIB's cost-to-income ratio in 2011 was 96.2pc, which is much higher than the average across Europe.