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Sunday 3 December 2023 Dublin: 5°C
AIB boss Colin Hunt

New AIB boss wants performance-based bonus ban lifted for bankers as staff are being enticed to competitors

Following the banking crash, a government policy on bonuses was rolled out for State-owned banks.

AIB’S NEW BOSS has said he is concerned about the level of pay some 10,000 of bank staff receive due to the ban on performance based bonus schemes. 

Addressing the Oireachtas Joint Committee on Finance, Colin Hunt thousands of AIB employees are being paid differently to other financial institutions, due to government restrictions on variable pay. 

Following the banking crash, a government policy on remuneration was rolled out for State-owned banks, which effectively banned performance based bonus schemes for workers. 

Hunt told the committee that he wants to be able to “reward staff” for their performance.

He said staff are being “enticed” to work for other banks because they can offer more money.

Sinn Féin’s Pearse Doherty told the new AIB chief executive that he sat on the banking inquiry, which was tasked with figuring out what went wrong in the Irish banking system in the run up to the recession. 

“Remuneration was tied into the sale of products,” said Doherty, who said the employees were encouraged to drive sales on credit and mortgages in order to receive bonus payments. 

Doherty said it many people will have memories of getting texts from their banks about being pre-approved for loans and overdrafts that they had not even applied for. 

“This was the culture of the banks, it was tied into an incentive-driven, performance-driven payments,” he said, adding that everyone knows how that panned out. 

Hunt said the lack of performance-based payments is of concern to share-holders of the bank. Doherty said the bank is 75% owned by the taxpayer, adding that “the Irish people are the biggest shareholder”. He stated that he hadn’t heard any arguments by the public for more pay for bankers. 

Cap of €500,000

The Donegal deputy also raised the issue of the cap of bank bosses – which the government has capped at €500,000. 

Currently, 11 AIB staff earn between €400,00 and €500,000. Hunt is one of the 11 staff members. 

A total of 15 staff members earn between €300,000 to €400,000. Staff that earn between €200,000 and €300,000 is 67, while 856 staff members earn between €100,000 and €200,000.

The majority, some 8,822 staff, earn under €100,000.

A report about whether to lift the cap on bankers pay is currently being carried out, after the Finance Minister Paschal Donohoe agreed the issue should be looked at. Bankers, such as Hunt, have raised concerns about the impact it is having on competitiveness. 

Hunt said he would await the recommendations of the report, adding that he would not be making any proposals in relation to the cap at the next AGM, as he would not like to speak out ahead of the report and the minister’s recommendations.

Loanbook sale 

The new chief executive also signalled today that the bank may sell further non-performing loans which could amount to €3 billion of debt by the end of the year.

He said AIB is still carrying a”large chunk of deep long-term arrears that simply must be reduced by year-end”.

Hunt said further sales following a €1 billion sale announced two weeks ago would be considered “as a last resort”. He told the committee that the sale of non-performing loans (NPL) has resulted in the NPL level reaching 8%. He said the bank wants to reach 5% by the end of the year. 

Hunt is not the only boss who has indicated that more of its customers’ mortgages will be sold on, with PTSB Boss Jeremy Masding stating that it plans more loan sales this year also. 

The AIB boss also revealed today that the bank currently has 583 vacant houses on its books. About 45 of these are buy-to-lets. 

He said the bank is working with the Housing Agency to move the stock into use. AIB has offered about 1,500 houses to the agency, he said. 

Hunt assured the committee that the bank is working to ensure the homes are available to help the “housing challenge”.

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