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Former executives of AIB will be asked to take pensions hit

THE chairman of Allied Irish Banks is to ask former executives to hand back part of their pension pots as the lender continues to struggle under growing mortgage losses.

Speaking at the bank's annual general meeting yesterday, David Hodgkinson said he was considering writing to former management and directors who are set for pensions worth hundreds of thousands of euro a year when they turn 65.

Former chief executive Colm Doherty is on course to receive a pension of €303,000 a year when he turns 65, while other former executives are set to receive similar payments. Legally, the bank cannot claw back any of these funds as they are protected by law.

Yesterday, however Mr Hodgkinson said he was "prepared to write a letter requesting voluntary deductions of pensions" from former management.

"If they were to volunteer to take a cut, clearly the gesture would be very welcome," he added.

The pension issue was one of many that took centre stage at a sometimes bad-tempered meeting that saw numerous shareholders vent their frustration at the board for the collapse of the firm -- and the value of their holdings.

AIB also revealed that nearly a fifth of the total value of its residential mortgage book is now behind by at least 90 days.

Figures provided by the bank after the AGM showed 17pc of the value of its home loans is now in arrears, up from 15pc at the end of last year. More than a third of the value of the buy-to-let book is behind.

Overall, 7.7pc of its private residential mortgages were 90 days or more behind at the end of the first quarter of the year, up from 6.9pc at the end of 2012.

Mr Hodgkinson refused to comment on reports that the Government was looking at ways to hive off loss-making tracker mortgages from the bank's balance sheet, other than to say that he would "welcome any measures to ameliorate the situation" in relation to tracker mortgages.

He also confirmed that the bank's computer systems were "robust" but said his staff would be testing the system's vulnerability to a problem like the ongoing issues at Ulster Bank.

"We have back up plans and contingencies that have been tested. However, recent events have given us a reminder that we need to re-examine the effectiveness of our systems and we will be carrying out that review again," said Mr Hodgkinson.

"Our system has the capacity to deal with 200pc or 300pc of our current payment levels, so we have the capability to deal with a very serious issue.

"It is an area of great concern and we focus on it at board and management level to ensure the systems are robust."

The bank reiterated it expected to be profitable again by 2014 and was working to get out of state ownership.

However, it admitted that AIB was still not an attractive investment to the market nearly four years into the financial crisis.

"We are keen to get investors into the bank. We have engaged with investors but we want to get a decent deal for the Government and taxpayers, so it is better to defer until the time that we get a better deal," Mr Hodgkinson added.

Irish Independent