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Further shocking revelations on bankers pay

15 November, 2012 - by Pearse Doherty TD


Sinn Féin Finance spokesperson Pearse Doherty has accused Minister for Finance of “feigning outrage” and “adopting a Pontius Pilate approach to excessive bankers pay”.

Deputy Doherty made the comments after Minister Noonan detailed further shocking revelations on bankers pay in AIB and Bank of Ireland.

Deputy Doherty said:

“Today under questioning Minister for Finance Michael Noonan revealed that 165 top executives on Bank of Ireland and AIB are receiving salaries in excess of €200,000 per year. 55 of these are earning over €300,000 per year. Twenty-eight are earning more than €400,000 per year.

“It is my understanding that the minister has not written to the management of either bank asking for voluntary reductions in the excessive salaries of any of these 165 individuals.

“The Minister initiated a review 18 months ago which has not yet concluded. Recently he brought in Mercer Consultants to assist with the review at a cost to the taxpayer €120,000.

“In response to my questions today the minister expressed what can only be described as fake outrage. Despite all his bluster he is adopting a Pontius Pilate approach to excessive bankers pay.

“Like something out of an episode of Yes Minister, Noonan is trying to hide behind a review as an excuse for not taking the action that everyone is demanding.

“Public and private sector workers have seen their salaries and pensions reduced significantly since the start of the crisis. The vast majority of these workers are on low to middle incomes.

“Yet the government continues to protect the excessive pay and pensions of top bankers, many of whom played leading roles in the events that caused the economic crisis in the first place.

“It is time for the minister to act and introduce the necessary legislation to bring these excessive pay-outs to an end.” ENDS
DÁIL QUESTION
NO 40
To ask the Minister for Finance the number of staff that are on a total remuneration package including pension payments, allowances and benefits of between €100,000 and €200,000, between €200,000 and €300,000, between €300,000 and €400,000 and the number with more than €500,000 at Allied Irish Bank..
- Sandra McLellan. (Nominated by: Pearse Doherty).
For ORAL answer on Thursday, 15th November, 2012.
Ref No: 50510/12
REPLY
Minister for Finance ( Mr Noonan) : AIB has provided me with the following information on current annual total remuneration packages:-
Total remuneration € Number of Employees*
100,000 – 200,000 1,159
200,000 – 300,000 85
300,000 – 400,000 8
400,000 – 500,000 10
500,000+ -
* AIB had 14,501 members of staff at the end of 2011
AIB fully recognises the absolute requirement to reduce staff costs across all areas of the business as they seek to return the bank to viability and drive value for the State as shareholder. The bank has taken, and continues to implement, changes to its pay and benefits structure within the confines of contractual obligations and seeking agreement with the Unions.
AIB has taken the following specific actions to address remuneration levels: reductions in pay and benefits of higher earners ranging from 7.5% to 15% implemented in H2 2012; defined benefit pension scheme to close from end 2012 for future service; other long standing staff benefits have been withdrawn. For other staff a pay freeze has been in operation since 2008 and the bank is in discussion with the IBOA to extend this to 2014.
A voluntary severance program aimed at reducing staff numbers by 2,500 by 2014 is ongoing. This program is weighted to candidates exiting under early retirement as this population of staff, given their length of service, would typically be amongst the highest historical earners. AIB is on track to meet its target of 2,500 voluntary departures and this is expected to result in annual savings to the bank in excess of €200m.
AIB is fully participating in the Government’s review of remuneration levels in the Covered Institutions. Including pensions and all other applicable benefits there are no staff members in AIB earning in excess of €500,000 per annum.
Excluding benefits and pensions, as of November 2012, c. 5% of staff have a base salary in excess of €100,000. Of these staff members, c.59% earn a base salary of between €100,000 - €125,000 and c. 91% earn a base salary of between €100,000 and €175,000. The number of staff earning more than €100k on a base salary basis has reduced by 15% since Dec 2011 and 31% since end 2008. By end 2012 the number of staff on base salaries of greater than €100,000 is projected to decrease to 700 staff, or a reduction of 18% from end 2011 or 33% from end 2008.
AIB is in the process of implementing changes to staff pensions and benefits with discussions ongoing with staff and the Unions. AIB is committed to ensuring that all elements of pay, including base pay and benefits, are in line with the bank’s operating performance and recognise the materially altered environment for Bank’s operating in Ireland. All changes need to be made against a backdrop of historical contracts that were put in place in a different operating and ownership environment.
DÁIL QUESTION
NO 65
To ask the Minister for Finance if he will provide in tabular form, with respect of Allied Irish Bank, the number of staff whose annual salary at 31 December 2011 fell into the bands €400,000 and above, €300,000 to €399,000, €200,000 to €299,999 and €150,000 to €199,000..
- Michael Colreavy. (Nominated by: Pearse Doherty).
For ORAL answer on Thursday, 15th November, 2012.
Ref No: 50511/12
REPLY
Minister for Finance ( Mr Noonan) : AIB has provided me with the following information on annual salaries as at 31st December 2011:-
Basic Salary € Number of Employees*
150,000 - 199,999 134
200,000 – 299,999 44
300,000 – 399,999 8
400,000+ 4
* AIB had 14,501 members of staff at the end of 2011
End 2012 – projected
Basic Salary €Number of Employees
150,000 - 199,999 96
200,000 – 299,999 24
300,000 – 399,999 11
400,000+ 2
By end 2012 those employees with a base salary of over €150,000 is projected to have reduced by 52% from end 2008 and by 30% from end 2011.
AIB fully recognises the absolute requirement to reduce staff costs across all areas of the business as they seek to return the bank to viability and drive value for the State as shareholder. The bank has taken, and continues to implement, changes to its pay and benefits structure within the confines of contractual obligations and seeking agreement with the Unions.
AIB has taken the following specific actions to address remuneration levels: reductions in pay and benefits of higher earners ranging from 7.5% to 15% implemented in H2 2012; the defined benefit pension scheme is to close from end 2012 for future service and other long standing staff benefits have been withdrawn. For other staff a pay freeze has been in operation since 2008 and the bank is in discussion with the IBOA to extend this to 2014.
A voluntary severance program aimed at reducing staff numbers by 2,500 by 2014 is on-going. This program is weighted to candidates exiting under early retirement as this population of staff, given their length of service, would typically be amongst the highest historical earners. AIB is on track to meet its target of 2,500 voluntary departures and this is expected to result in annual savings to the bank in excess of €200m.
AIB is fully participating in the Government’s review of remuneration levels in the Covered Institutions.

DÁIL QUESTION

NO 29, 63 and 83

To ask the Minister for Finance when the report from Mercer Consultants on remuneration in the banking sector will be completed; and if he will make a statement on the matter.


- Billy Kelleher. (Nominated by: Michael McGrath).

For ORAL answer on Thursday, 15th November, 2012.
Ref No: 50492/12


To ask the Minister for Finance with regard to the ongoing review into bankers remuneration, the date on which the review will be completed; the cost of the review to date; the estimated final cost of the review; the level of engagement by his Department in the review in terms of the numbers of meetings and estimated staff time allowed for this purpose; the terms of reference of the review; and if any consideration is being given to review considering increase in cap..


- Sandra McLellan. (Nominated by: Pearse Doherty).

For ORAL answer on Thursday, 15th November, 2012.
Ref No: 50509/12


To ask the Minister for Finance the cost of hiring Mercer Consultants to consider the issue of pay among top executives in the Irish Bank Resolution Corporation..


- Gerry Adams.

* For WRITTEN answer on Thursday, 15th November, 2012.
Ref No: 50699/12

REPLY


Minister for Finance ( Mr Noonan) : I propose to answer questions 29, 63 and 83 together.

The Deputies will be aware that my Department is presently engaged in a Review of Remuneration Practices and Frameworks at the covered institutions. I have recently engaged, as I informed the Opposition Spokespersons on Finance, the services of Mercer (Ireland) Limited following a limited competitive tender competition to assist my Department in bringing this exercise to a conclusion. The estimated cost of the review, at this stage, is approximately €120,000.
The object of the review is to thoroughly review all remuneration practices at the covered institutions with the object of simplifying remuneration and compensation structures, discouraging excessive risk-taking and to better align pay and reward to long term value creation. Present Government policy on remuneration dictates that no employee, at the covered institutions may receive more than €500,000 (excluding pension contributions) per annum and remains in force.
Numerous engagements by my officials and Mercer have taken place since the awarding of the contract. I am expecting the consultant’s report to be delivered by year end whereupon consultations with the various stakeholders will commence.
As I have said previously, I fully recognise that there is a real public interest in the levels of remuneration at the covered institutions and have committed to placing the details underpinning the review into the public domain.

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