Wednesday 17 January 2018

Bankers still on 'fat-cat deals'

Sarah Stack and Ed Carty

More senior executives at bailed-out banks are in line for controversial multimillion-euro severance packages.

Finance Minister Michael Noonan warned a number of top bankers are sitting on fat-cat contracts signed off by his predecessor and are due massive lump sums on retirement.

He confirmed Colm Doherty, the former managing director of Allied Irish Banks (AIB), secured a €3m plus package when he stepped down last November.

"The previous government shouldn't have allowed this situation to develop," said Mr Noonan.

"But Mr Doherty is contractually legally entitled to what he got because of the decisions made by the previous government.

"We can make sure that the new contracts don't have the same generous provisions that the old ones have but there are still a number of old contracts running and there are still people in the employ of the banks who have contractual and legal rights if they were to retire in the near future."

AIB, once Ireland's biggest bank, last week announced losses of €10.4bn in 2010 and announced plans to axe 2000 staff by the end of next year.

The lender is costing Irish citizens €13bn in bailouts.

It is understood he received a salary of €432,000 when he was forced out of AIB at the direction of then finance minister Brian Lenihan in November. He also received a termination payment of €707,000 in lieu of a year's notice. On top of that the banker was given about €2m cash in lieu of pension contributions.

Mr Noonan said he had to deal with the possibility it could happen again.

"We can only deal with what happens on our watch and I can assure you new people being hired in to the banks in senior management positions will have less advantageous contracts and less advantageous remuneration packages," he added.

Larry Broderick, general secretary of the Irish Bank Officials Association (IBOA), said it beggars belief that executives who took banks to the brink of bankruptcy get excessive rewards.

"The injustice in this situation is compounded by the fact that this revelation comes just one week after Mr Doherty's successor announced his intention to make over 2,000 staff redundant," he said.

"Restructuring is not only about the number of staff leaving the bank; it is also about ensuring that the morale of the staff who will remain is maintained so that they can give of their best to promote the recovery of the business."

Mr Lenihan defended his role at the time and said the pay packet will be greeted by anger, frustration and disbelief by the Irish public.

"I share these feelings," he said.

"The public interest directors of AIB lobbied for the appointment of this individual but as minister for finance I was successful in imposing a limit on banker salaries.

"I ensured that a pay reduction applied to this individual upon his appointment as managing director of AIB.

"The other entitlements, including pension entitlements, were pre-existing contractual obligations and had the same legal standing for the last government as they do for Minister Michael Noonan and his colleagues."

Meanwhile Gerry Adams, Sinn Fein president, demanded the Government intervenes and prevent this payment.

He added: "They have no problem bringing in legislation to support the mugging of ordinary citizens, the universal social charge. They have no problem bringing other laws and regulations.

"They should intervene and stop this man from taking this obscene amount of money."

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