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November 6, 2012 1:14 pm
Allied Irish Banks has written to former directors at the bank who were in office during Ireland’s financial crisis to ask them voluntarily to forgo a portion of their pensions amid growing public anger at the scale of payouts to bankers.
The Irish lender, which required a €20bn state rescue, began issuing letters on Tuesday to former AIB directors and executives including former chief executive Eugene Sheehy and managing director Colm Doherty.
David Duffy, AIB’s chief executive, said he had no legal authority to force former directors to relinquish a portion of their pensions but he thought there was a “moral” case for individuals to do so. He said upwards of 15 former directors who worked at the bank in the lead-up to the financial crisis would receive the letters from the bank over a four to six week period.
“On a moral basis we believe that there is a judgment that some individuals can make a contribution,” he told the Financial Times.
“I am not here to be judge and jury. I am just here to recognise the fact that I should hold a mirror up and say ‘this is the pain and suffering that the bank employees are going through. You have been part of that cycle of the economy you must make a judgment yourself’,” said Mr Duffy, who was appointed last year amid a wholesale clean-out of personnel at all of Ireland’s main banks.
AIB, which is Ireland’s second-largest bank by assets, was nationalised during Ireland’s banking crisis, which ultimately forced Dublin to accept a bailout from the EU and International Monetary Fund. In March the bank reported a loss of €2.3bn for 2011 amid continuing weakness in the Irish economy and declining consumer and government spending.
AIB recently announced 2,500 voluntarily redundancies, pay cuts of up to 15 per cent for senior executives and managers, and the closing of its defined benefit pension scheme as part of a €220m cost saving plan to try to return the bank to profit.
A public controversy erupted in Ireland last week when AIB confirmed to a parliamentary committee that it agreed the transfer of €1.1bn of loans to help bolster its pension fund, which pays the pensions of AIB staff and former executives.
Irish media have reported Mr Sheehy is paid an annual pension of up to €500,000 while Mr Doherty will receive a pension worth up to €300,000 when he turns 65 years old.
Mr Duffy said the €1.1bn transaction was made by AIB to enable the early retirement part of the bank’s cost saving programme to proceed and had nothing to do with the funding of pensions for executives.
He said there was an element of “populism” in the debate, with the media alleging that this was “a transfer of taxpayers money to fund Sheehy”.
“That is not what happened at all – it was a sale which was going to happen regardless,” he said.
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