AIB BANKERS are seeking their just rewards. No matter that AIB has haemorrhaged money. Nor that it cost the State €21bn in the bailout. Forgotten are the small shareholders. And its owner – the State – can stuff it.
In recent weeks, the top AIB boys sprung out of the traps demanding equal treatment with their overpaid, overseas peers.
It was a well-plotted putsch. The leading lights in AIB struck while the heat was directed elsewhere. Under the cover of the flak flying in the direction of the Central Remedial Clinic, the Garda Commissioner and others, they slinked up to the Department of Finance and dropped the toxic potion in the mix. AIB bosses wanted performance bonuses – for their service to the nation.
No one has recorded the mandarins' reaction. But reports from the department that the proposal came during "routine discussions in the last two months" suggest that it was not dismissed out of hand.
It was only when Bloomberg broke the story last week that the idea was rubbished by Minister for Finance Michael Noonan. Yet it seems to have been in the ether of his department for a few weeks before it was outed.
According to the Bloomberg story, no less a mortal than AIB chairman David Hodgkinson led the delegation in the "exploratory" talks with Finance Ministry officials. The shock prospect of bonuses was cleverly spun by banking insiders as only being in the context of AIB returning to profit.
Well what a coincidence. Hodgkinson and his sidekick, AIB chief executive David Duffy, are predicting that AIB will return to profit this year. Bravo. So who is first in the queue for the profits? The customers? The small shareholders who have seen their stock sink from €24 to Friday's price of 14c? Or even the citizens of the nation that owns them?
The citizens, the small shareholders and the battered customers will have to wait. Nothing has changed. The first guys with their hands in the till will be the bosses on six-figure salaries.
We should have known. AIB chairman David Hodgkinson is one of the old school on bankers' pay. Hodgkinson was a career banker at HSBC where options, performance bonuses and big pensions were the order of the day. He is on record as insisting AIB must pay "top dollar" if it is to attract the best talent. That is exactly what Ireland's rotten banking fraternity was saying before the bust, when fallen bankers Brian Goggin, David Drumm and Eugene Sheehy were trousering millions every year.
In those days, banking apologists were constantly threatening us with the loss of Goggin, Drumm and Sheehy unless we paid them millions! Where would we be today, without them?
Solvent, for a start.
Hodgkinson should test out his theory by asking David Duffy to put an advertisement in The Economist.
"Irish banker of insolvent outfit seeks employment. Not recognised in his own land as a genius. Will accept offers of basic salary in excess of €12,000 a week. Package must include additional performance bonuses capped at twice basic income (€1.2m), share options and long-term incentives. Relocation expenses essential. References available from Ireland's Department of Finance, AIB chairman David Hodgkinson and Finance Minister Michael Noonan."
Thankfully Michael Noonan responded rapidly to AIB's manoeuvre, but not until it was rumbled by Bloomberg. From across the Atlantic in New York, he was quick to scotch the bonus story. But his dismissal was far from absolute. It was qualified.
In folksy language, he said: "The answer is, sorry guys, much better performance required before we'll even consider bonuses. If any executive wants to leave AIB I'll shake his hand and wish him fair passage as he leaves."
The door was far from closed. It was wide open. No bonuses today, but tomorrow. . .
Noonan's statement seemed almost surprised. If the bonus proposal was really on the table "in the last two months", did anyone tell the minister? Were the mandarins keeping him in the dark? Or was he simply flushed out by Bloomberg?
Mr Noonan is playing a difficult double game. He is seducing global market players while trying to keep the punters at home happy. He strives to assure international investors that our banking system is approaching normality while persuading the electorate that he is still in punitive mode.
Last week Michael was in Davos, mingling with the big bankers, the world's top speculators, the predators and the hedge funds. From the Swiss Alpine village he gave an interview (funnily enough to Bloomberg's international audience), explaining that our recovering state banks were heading towards privatisation and how we would even test the market in AIB shares over the next two years. He was going to flog our 15 per cent stake in Bank of Ireland as well.
Out there on the ski slopes, he was erecting the "For Sale" sign on AIB's Ballsbridge Bank Centre and on the Bank of Ireland in College Green. He lauded our banks' balance sheets, recklessly insisting that they would need no new capital following this year's stress tests. He mentioned that they had passed their asset quality review late last year; property prices had increased; growth would be over 2 per cent; Moodys had upgraded us. Michael was gilding the lily for the foreign buyers of Irish banks.
After he departed, upbeat, from Davos, he headed for Brussels. It was a different story in the corridors of political power of Europe. In Brussels he is still trying to persuade his European allies that Ireland's banks are in such desperate straits that we need the eurozone to bail them out with "retrospective recapitalisation". A difficult tightrope, when you have just boasted about their recovery in downtown Davos.
Europe will not be fooled. Nor will the Irish people. The "retrospective recapitalisation" pipe-dream should be given a decent burial.
Michael headed from Brussels straight to New York to help the NTMA flog Irish bonds. No sooner had he landed, than he was greeted by the Bloomberg story about bankers' bonuses returning to Ireland.
His American hosts would have approved of a reversion to the excesses of capitalism, but his long-suffering Irish audience would have been horrified. So he dealt with the problem by feeding his craftily worded, light-hearted denial to his Irish audience from distant New York.
Do not swallow the denial. Bankers bonuses are on the way back. Worse still, we will soon see the re-emergence of the worst of all incentives: share options. The plans were well-laid last year when Mercer – another gang of dreaded consultants – gave the minister cover by stating in a specially commissioned report that incentives for bankers were a future possibility. The seeds were being sown.
The report further stated that the incentives could be put in place "when the institutions look likely to return to profitability and hence have the opportunity of coming out of state ownership".
A roadmap had been drawn. Last week's "leak" to Bloomberg was another signpost.
The Mercer report was ignored last year – but the die was cast. We were being softened up. The way forward has been cleared: privatisation bonanzas for top bankers are on the agenda.
Mercer even spoke of the likelihood of "share-related securities" for the lads. They smell horribly like discredited share options by another name. Share options in AIB, at today's price of 14c, will be a steal as the bank approaches privatisation.
The highwaymen are, once again, about to run away with the booty.