Saturday 25 November 2017

State-owned AIB wants to breach €500,000 pay cap

Photo: Getty Images
Photo: Getty Images

Laura Noonan Banking Correspondent

AIB has asked Finance Minister Michael Noonan to consider paying the nationalised bank's next chief executive as much as €690,000 -- some €190,000 more than the current banking pay cap.

AIB executive chairman David Hodgkinson confirmed the request yesterday, as he revealed that he had agreed to stay on as the bank's non-executive chairman for a year after his term-in-charge ends in October.

The revelations came at a wide-ranging appearance of AIB bosses before a committee of TDs and senators, where it also emerged that:

•AIB's mortgage-interest rates may increase, as the bank narrows the gap between its rates and those offered by competitors.

•AIB is "keen" to explore mortgage solutions that could see some borrowers released from some of their debts, while staying in their homes.

•The bank has already written off some of their mortgage debt for a "handful" of borrowers -- but only after they surrendered their homes.

•AIB hopes to attract a "minority investor" by early next year, most likely a private equity firm.

•The bank still has not identified where it will make the 2,000 job cuts announced in April.

Mr Hodgkinson yesterday said he was "confident" AIB would get a new chief executive "within the CIROC salary range", a reference to a Government report that had recommended a €690,000 pay cap for AIB.

Fine Gael TD Kieran O'Donnell described it as an "obscene amount of money".

Apologise

"I apologise for setting hares running," Mr Hodgkinson said. "I'm not angling for a particular position ... If we are restricted to €500,000, that is what will happen."

Having started with a "long list" of more than 250 names, AIB is now down to a short list, who have all been interviewed by the bank's board and the Central Bank. Speaking after the meeting, Mr Hodgkinson said the bank was "very close" to the end of the process.

Mortgages dominated much of the conversation, with some politicians drawing attention to AIB's relatively low standard-variable-rate loans which did not rise after either of this year's ECB rate hikes.

The AIB chief was also questioned extensively on the bank's engagement with troubled borrowers, prompting Mr Hodgkinson to confirm that AIB had already waived debt in a "small handful of cases" where homes had been voluntarily surrendered.

The bank wants a "proper framework" on an industry-wide basis that would allow it to "help customers in the longer term", Mr Hodgkinson added.

Asked if this could include waiving some debt for people who stay in their homes, Mr Hodgkinson said "that's something we are keen to see where it is the most appropriate solution".

Irish Independent

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