The Minister for Finance Michael Noonan has confirmed in a Dáil reply to Fianna Fáil Finance Spokesperson Michael McGrath that he has received a formal request from AIB in the past few days seeking permission to appoint a new Chief Executive with a salary in excess of the €500,000 cap imposed by the previous Government. In a parliamentary reply, Minister Noonan confirmed he is examining the bank’s request.

Deputy McGrath stated, ‘AIB is a bank which is 99.8% owned by the Irish Government, on behalf of the Irish people. In my view, the salary cap of €500,000 remains appropriate and should be honoured. I believe that such a salary should be sufficiently generous to attract a top calibre new Chief Executive for the bank.

‘In March 2009, following consideration of the Report of the Covered Institutions Remuneration Oversight Committee (CIROC), the previous Government imposed a salary cap of €500,000 for bankers and the cap has remained in place since.

‘At a time when thousands of ordinary families in Ireland are struggling to make ends meet on a day-to-day basis and are bracing themselves for a tough budget in December, news that the Government is even considering the AIB request to sanction a salary in excess of €500,000 will be greeted with shock and disbelief. The news will also be a bitter pill to swallow for the thousands of employees working in the banking sector who look set to lose their jobs over the period ahead because of the reckless decisions of some senior executives.

‘Fine Gael and Labour were long on rhetoric when in opposition about bankers’ pay and bonuses. They now have a formal request from AIB on their desk which they must decide upon. I believe the Government should insist that the salary cap is honoured in relation to this and other appointments in the banking sector.’

 

 

Please find below, Parliamentary Question submitted by Michael McGrath TD and Minister Noonan’s response:

 

Deputy Michael McGrath asked the Minister for Finance if he will provide details of his contacts in recent weeks with AIB in relation to the appointment of a new chief executive; if the bank has requested permission to award a salary in excess of €500,000 to the new chief executive; and his views on the appropriate salary that should be paid.

Minister for Finance (Deputy Michael Noonan):

As I have stated in reply to previous questions on this subject, I am keen that a successful outcome regarding the appointment of a new CEO at AIB is achieved shortly as that bank is a fundamental part of the announced Government strategy to restructure the banking sector and any proposed appointee would play a pivotal part in this process. Additionally, I am anxious that the situation whereby the Executive Chairman of AIB combines both positions of Chairman and CEO is resolved.

The Executive Chairman of AIB has kept my Department apprised of developments in the search for a new appointment.

I have, within the last few days, received a formal proposal from AIB for a remuneration package for the post of CEO which includes a request for a base salary to be paid in excess of the Government agreed cap of €500,000.

However, it is the view of the Government that a compelling case would have to be made for the Government to consider setting aside this cap taking account of the recent decision on the pay ceilings for CEOs of Semi States and Senior Public Sector posts and the need for social solidarity to be shown by all individuals and sectors for the good of the nation and its recovery from the present challenging circumstances.

I will examine the AIB request in that context.