AIB to cut executive pay by up to 15pc and change pension scheme
STATE-owned Allied Irish Banks (AIB) is to cut executive pay by up to 15pc.
It will also transfer all staff to a defined contribution pension scheme to cut its cost base as it shrinks its operations.
AIB, which was effectively nationalised last year in the fallout from the property market crash, is also in talks with unions about a potential general pay freeze until the end of 2014, the lender said in an email to staff today.
"It is imperative that the cost base of the bank is sufficiently aligned with the overall operating performance to attract external investors," chief executive David Duffy said in the email.
The bank's 2011 cost to income ratio of 96.2 percent was unsustainable, he said.
Pay to all members of the executive committee, including Mr Duffy, will take a 15pc pay cut from August 1.
Other executives will take a 10pc cut.
"Prohibitively expensive" defined benefit pension schemes will be replaced by defined contribution schemes, AIB said.
AIB started a consultation process with trade unions in March to cut 2,500 jobs out of a total of over 14,000 in Ireland and Britain.
Ireland has pledged to radically shrink its banking system as part of an EU/IMF/ECB bailout and AIB will be one of two so-called "pillar banks" left from what was once a crowded field.