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Threat stops bonuses
By Yara Bayoumy |
December 15, 2010, Wednesday
|
Print Edition
Print Edition
IRELAND'S Allied Irish Banks said on Monday it would not pay bonuses to executives after the finance minister threatened to stop state support for the bank if the extra money was paid out.
Media reports said last week that AIB would pay out 40 million euros (US$53.70 million) to some of its executives in bonuses for work that was done in 2008, prompting a storm of criticism among policy makers.
Once the state's largest listed lender, AIB is facing a majority state ownership due to additional capital requirements.
The government was forced to seek an 85 billion euro IMF/EU assistance amid rising nervousness about future loan losses at its banks, whose reckless lending practices fuelled a property bubble that plunged the country into crisis.
Finance Minister Brian Lenihan had written to AIB saying state support would be "conditional on the non-payment of bonuses awarded, no matter when they may have been earned," a statement said.
AIB said in a separate statement that while the board received legal advice that it was obliged to pay these bonuses, Lenihan's letter had made them reconsider.
AIB said the bank will continue to rely on support from the state and taxpayers for some time to come. "Accordingly, the Board has decided not to pay the bonuses."
Media reports said last week that AIB would pay out 40 million euros (US$53.70 million) to some of its executives in bonuses for work that was done in 2008, prompting a storm of criticism among policy makers.
Once the state's largest listed lender, AIB is facing a majority state ownership due to additional capital requirements.
The government was forced to seek an 85 billion euro IMF/EU assistance amid rising nervousness about future loan losses at its banks, whose reckless lending practices fuelled a property bubble that plunged the country into crisis.
Finance Minister Brian Lenihan had written to AIB saying state support would be "conditional on the non-payment of bonuses awarded, no matter when they may have been earned," a statement said.
AIB said in a separate statement that while the board received legal advice that it was obliged to pay these bonuses, Lenihan's letter had made them reconsider.
AIB said the bank will continue to rely on support from the state and taxpayers for some time to come. "Accordingly, the Board has decided not to pay the bonuses."
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