Troika urged Finance to allow lenders cut deals with unions
THE Department of Finance has abandoned attempts to agree a universal redundancy package across our rescued banks after sections of the IMF/EU/ECB bailout team urged it to leave the final negotiations to the banks.
Sources last night confirmed that the Government spent months pushing for AIB and Bank of Ireland to offer redundancy pay-offs of three weeks' salary plus two weeks' statutory pay, in the hopes that the package would be followed for any future state bank lay-offs.
But the Government has now agreed to allow AIB to negotiate its own package with trade unions for 2,500 job cuts, provided any pay-offs stay within the broad "parameters" laid down by the department.
This means the details of AIB's package may not be the same as BoI's, and will not necessarily be a blueprint for any future redundancies at almost-nationalised Permanent TSB.
A spokesman for the Department of Finance last night denied the latest developments had been influenced by the troika, saying the "only discussion" with the bailout officials had been "an agreement that redundancy plans must take account of the high level of investment by taxpayers in these banks".
Other sources, however, said the department's change in approach was partially linked to an intervention by elements of the troika who expressed concerns about the way discussions were shaping up.
AIB spent the best part of a year trying to hammer out terms with Finance, prompting repeated criticism over the pace of progress from bank workers' trade union the IBOA.
The Irish Independent has learned that the IBOA recently met with a delegation from the European Commission, European Central Bank and International Monetary Fund to discuss their concerns.
The Irish Independent has also learned that some elements of the troika have recently suggested the Government step back from the process because the lay-offs would progress more quickly without such intensive state involvement.
Officials from at least one part of the troika are also understood to have reminded the Government of its commitment to run the banks on an "arms length" basis and not interfere with their day-to-day running.
It is understood that all officials appreciate the need for the Government to ensure the banks don't spend too much money on the redundancies, but that this does not necessarily mean the Government must lay out exact terms.
In the case of AIB, the Government has agreed an overall cap for the amount AIB can spend on any lay-offs and has laid out other "parameters" but left the bank to hammer out the final details with unions.
Sources last night stressed that the over-riding aim of the troika was for Ireland to create banks that were "well managed, cost efficient and able to stand on their own feet".
AIB's redundancy and early retirement terms are expected to be published in early April, after the bank finishes a 30-day consultation with unions. Sources last night said Bank of Ireland's programme remained "deadlocked" as the bank and the Government continued to clash over the parameters for any package.